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Trade Related FAQ

  • What are the deposits paid to the owners of commercial and residential property for taking their properties on lease/rent?

    Ans: The refundable security deposits for commercial properties are quantified in terms of months multiplied by the license fees agreeable under the related contract. It usually could be 3 Months, 6 Months, 9 Months of a Leave and License fees which a Licensor may levy on the Licensee as a refundable security Deposit. In extreme cases it could also be a month’s license fees or an entire year’s license fees which could be formed as a refundable security deposit in commercial property transactions.

    The principal remains the same for residential properties however the Licensor may demand a lump sum amount depending on the property,transaction, tenure etc.

    The Leave & License transactions could either be facilitated on low rent-High Deposit or High rent-Low Deposit structure, the discretion of which usually lies with the Licensor however a concomitant decision is mutual.

  • What is the ongoing escalation/increase in rent per annum for commercial and residential properties?

    Ans: The escalation or increase in license fees could be 5%, 10% or even 15% depending on after how many years such escalation becomes effective. This is purely a mutual decision between the licensee and the licensor and usually done either yearly or on 3 yearly basis.

  • What is a lock in period? And is it necessary for a tenant to lock himself in?

    Ans: A period of time during which either/neither party/parties can terminate a lleave & license agreement unless there is a breach of agreement. The defaulting party has to compensate the other party on a prior agreed penalty which is stated in the agreement. The lock-in period is usually decided mutually between the parties.

  • Who pays the service tax charged on the Leave & License fees of the property?

    Ans: The tenant/licensee of the property pays the service tax.

  • Who pay the property tax?

    Ans: The owner/licensor of the property pays the property tax.

  • Could I get a sample lease, leave & license, sale deed agreements?

    Ans Sure! Any SMART member can just mail on This e-mail address is being protected from spambots. You need JavaScript enabled to view it for residential or commercial lease, leave & license or sale deed agreement/s and the association’s office will send you one right away. You may also browse through “Standard Documents” section on home page for retrieving legal draft agreements.

  • Who pays maintenance charges in the leave & License agreement?

    Ans: The landlord usually pays the maintenance charges .However the decision is mutual.

  • What is “loading” or” efficiency” terms with respect to carpet, built-up, chargeable or super built-up areas?

    Ans: The “loading” in terms of size of the real estate property is a term used to quantify such property. The “Load” in a term “loading” is in relation to the proportional common area like lobbies, staircases, terraces, compound area which a builder/landlord/owner adds in the carpet area to form chargeable or super-builtup area. The loading factor varies from properties to properties. The older properties has a less loading factor than the newer ones.

  • What is carpet area?

    Ans: The actual useable area measured taking into consideration inner wall to wall measurement of the premise barring areas like niches, dry spaces, flower beds etc.

  • What is built-up area?

    Ans: Carpet Area + 20% of Carpet area = Built-up Area

  • What is super -built up area?

    Ans: Carpet Area + Proportionate Common Area = Super-built up area

  • How are rentals charged for commercial and residential properties in South Mumbai?

    Ans: Rentals are usually charged on the super-built up area, however in some cases they are charged on carpet or built-up areas as well.

  • What is Rent/license fee free period? And how does one get that?

    Ans: Rent Free Period: An agreed period, usually for several weeks or months, during which a lessee is allowed to occupy the subjected premises without payment of rent/license fee in consideration for the tenant incurring expenditure on such matters as fitting out premises or carrying out repairs or improvements.

    Premises ready to move / occupy - You don't get any rent free period

    Premises needs time to make changes/interiors/repairs-You get rent free period.

    Please note: The number of days one can get rent free period is purely a part of the negotiations with the property owners