The lease for a business premises. It runs for years rather than months, which makes it registrable, and an unregistered lease is not evidence of its own terms.
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The legal document setting out the terms on which a business premises is leased, and binding landlord and tenant to them.
A lease deed for a commercial property is a legal document laying out the prescribed terms and conditions under which the premises are leased, to be followed by both the landlord and the tenant. It is what either side relies on in a dispute, and two copies are executed with each party retaining one original.
It is not a residential agreement with the word changed. A business fitting out a shop or an office needs long enough to earn the fit-out back, so commercial terms run for years, commonly three to nine, with the rent escalation written into the deed rather than renegotiated at each renewal.
The length is what makes registration matter. A lease of a year or more is compulsorily registrable, and an unregistered lease that required registration is not admissible as evidence of its own terms. That is precisely the moment a tenant who has spent money on the premises needs to prove what was agreed.
A commercial lease is worth doing properly because the tenant is about to spend money on somebody else’s building. Almost every clause here is really about what happens to that money.
Tie it to the tenant’s actual trade. Too wide and the landlord has no say in what opens there; too narrow and an ordinary change of business becomes a breach.
A lock-in protects the landlord’s income and an exit right protects the tenant’s downside. Both are normal, and a lease with only one of them is one-sided by accident as often as by design.
The tenant usually fits the premises out. Say who owns the fittings at the end, whether the premises have to be restored, and who bears the cost of doing it.
A lease of a year or more is compulsorily registrable, and an unregistered one is not admissible as evidence of its own terms. Budget the duty and the time before signing.
The two documents look alike and diverge on almost everything that matters. This is what changes once a property is let for a business.
| Attribute | Commercial | Residential |
|---|---|---|
| The bargain | ||
| A named businessThe permitted use is written narrowly and tied to the tenant’s actual trade. Write it too loosely and the landlord has no say in what opens there; too narrowly and an ordinary change of business becomes a breach. | Living inThe deed usually says the property is let for residential use only, which is what stops a tenant running a business out of it. | |
| Three to nine yearsA business fitting out a premises needs to know it can stay long enough to earn the fit-out back, so commercial terms are long and almost always registered. | Eleven monthsThe common Indian arrangement, renewed by a fresh deed. Eleven months keeps the lease under the twelve-month threshold at which registration becomes compulsory. | |
| Written inA long lease sets the escalation in the deed, commonly a fixed percentage every few years, so neither side is renegotiating rent mid-term. | At renewalRenegotiated when the next eleven-month deed is drawn up. | |
| Months of rentUsually stated as a number of months, and larger, because the landlord is carrying the risk of a longer term and of a fit-out to make good. | By local customVaries widely between cities, from a month or two of rent to ten. The deed should say what it is held against and when it comes back. | |
| What goes wrong | ||
| The tenant, usuallyWhich makes the deed say who owns the fittings at the end, whether the tenant has to restore the premises, and who bears the cost if they do. | The landlordThe property is handed over ready to live in, and the tenant is normally forbidden from making structural changes. | |
| Usually requiredA term of a year or more is compulsorily registrable, and an unregistered long lease is not admissible as evidence of its own terms, which is exactly when a tenant needs it. | Usually avoidedA lease of twelve months or more must be registered. The eleven-month deed is the standard way around it, and it has to be genuinely re-executed rather than quietly rolled on. | |
| Set by the stateGenerally higher than for a residential letting, and higher again as the term lengthens. It is worked out on the same three inputs. | Set by the stateRates and the way they are calculated differ from state to state, and are usually a function of the rent, the deposit and the term. Check the rate for the state the property is in. | |
| Next step | Get started | Know more |
Swipe the table sideways, Commercial stays in view. Open any attribute to read the detail behind both answers.
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A lease of a year or more is compulsorily registrable, and most commercial leases run well beyond that.
Registration costs money and takes time, and both are worth budgeting for before the deed is signed rather than discovering afterwards.
An unregistered lease that required registration is not admissible as evidence of its own terms. In practice that means the tenant cannot prove the term, the rent or the renewal right they negotiated.
It is the tenant who loses most by it, and the tenant is usually the party who has spent money on the premises.
It is set by the state and is generally worked out from the rent, the deposit and the term, and it rises as the term lengthens.
We confirm the rate for the state the property is in as part of the drafting.
You can, and some short lettings are done that way. It is rarely sensible for a business that is fitting out the premises, because eleven months is not long enough to earn a fit-out back and the landlord is under no obligation to renew.
Whatever the deed says. There is no default, and leaving it silent is one of the commonest causes of a mid-term argument in a commercial letting.
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Before the fit-out starts, and with the registration position settled.
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