Commercial Lease Agreements in India: What Foreign Tenants Should Negotiate Before Signing (2026)
Written by the Delhi Legal Company India Entry & FDI Advisory team · Last updated August 2026 · Reviewed against the Transfer of Property Act, 1882, the Registration Act, 1908 and the Indian Stamp Act, 1899
Introduction
Two numbers surprise every foreign tenant in India, and both are negotiable.
Security deposits generally fall between 6 and 10 months of rent. On a modest office at ₹5 lakh a month, that is ₹30 to ₹50 lakh handed to a landlord, interest-free, for the life of the lease. Groups arriving from markets where three months is generous budget for three months and discover the gap after the term sheet.
The second is the lock-in. Standard practice in commercial leases is typically 12 to 36 months. Leave inside it and you owe rent for the balance regardless of whether you are in the building.
There is a third thing, and for a foreign-owned subsidiary it matters more than either. Your lease is not only a property document. It is the occupancy evidence your bank will want before opening an account, the address proof your incorporation depends on, and what a GST officer looks for on a physical verification.
Which means the lease decision sits on the critical path of your India entry, and a document negotiated purely as a property matter can fail three other tests.
This guide covers the structural choice between a lease and a leave and licence, where the registration line actually falls, what the two big numbers are really worth, and what to negotiate before signature.
About this guide
Delhi Legal Company works exclusively with foreign companies establishing and operating in India. The office lease is usually the first substantial Indian contract a group signs, often before it has anyone in India to review it.
Where a rule is settled we state it with the statute. Where practice varies by state — and property law in India varies a great deal — we say so rather than offering a national answer that will not match your city.
Primary sources: the Transfer of Property Act, 1882, the Registration Act, 1908, the Indian Stamp Act, 1899 and state stamp legislation, and the Indian Easements Act, 1882.
1. Lease or leave and licence?
This is the first decision and it is structural, not cosmetic.
| Lease | Leave and licence | |
|---|---|---|
| Governing law | Transfer of Property Act, 1882 | Indian Easements Act, 1882 |
| What it creates | An interest in the property | Temporary permission to use, not legal possession |
| Tenancy rights | Yes | No — a licensee cannot claim tenancy rights |
| Preferred by | Tenants seeking security | Landlords, particularly in Maharashtra, because it avoids creating tenancy rights |
| Security for the occupier | Stronger | Less security to the tenant |
1.1 Why landlords prefer licences
A lease creates an interest in land, and with it a body of tenant protection built up over a century. A licence is permission that can be revoked on its terms.
For a landlord that difference is the whole point. For a tenant it is the reason to look carefully at what is actually being offered, particularly where the group is spending significantly on fit-out.
1.2 Which should a foreign tenant want?
It depends on the commitment.
Where the group is taking a small serviced or managed space for a year or two with minimal fit-out, a licence is normal and the reduced security matters little.
Where the group is taking a floor, spending on fit-out, and treating the address as its registered office for the next five years, the weaker position under a licence is a real exposure. Negotiate for a lease, or for licence terms that give equivalent protection on the points that matter — quiet enjoyment, a defined notice period, and no revocation at will.
2. Registration: where the line actually falls
Published guidance frequently says registration is required for agreements “exceeding 11 months”. That is a useful shorthand that gets the reason backwards.
Under the Registration Act, 1908, any lease agreement for immovable property in India, including commercial premises, with a term exceeding twelve months must be registered with the Sub-Registrar’s office. This is not optional.
Under the Registration Act 1908, rent agreements for a tenure of 12 months or longer must be mandatorily registered.
The statutory line is one year. Section 17(1)(d) of the Registration Act, 1908 requires registration of leases of immovable property from year to year, for any term exceeding one year, or reserving a yearly rent.
2.1 Why eleven months, then
Because eleven months sits under the line.
A rental agreement that lasts more than 12 months must be registered under the Registration Act of 1908. As a result, leave and licence agreements are normally for 11 months to save stamp duty and registration fees.
The eleven-month convention is a consequence of the twelve-month rule, not the rule itself. Saying the threshold is eleven months inverts cause and effect — and it matters, because it obscures that a twelve-month agreement is registrable while an eleven-month one is not.
2.2 What an unregistered agreement costs you
An unregistered lease agreement that exceeds twelve months cannot be admitted as evidence in a court of law, which means if a dispute arises with your landlord over rent, eviction, or deposit refusal, you have no legally enforceable position.
Unregistered agreements exceeding 11 months are not admissible as evidence.
Read that against the security deposit. A group with ₹40 lakh on deposit under an unregistered long lease, facing a landlord who declines to refund it, is holding a document a court will not look at.
That is the single strongest argument for registering, and it usually costs less than a month’s rent to do.
2.3 Maharashtra is different
In Maharashtra, even Leave and License agreements must be registered.
A group taking space in Mumbai or Pune cannot use the eleven-month structure to avoid registration in the way it might elsewhere. Check the position for your state before assuming the national pattern applies.
2.4 The eleven-month trap for a registered office
This is specific to foreign-owned companies and worth isolating.
An eleven-month agreement avoids registration. It also means your registered office address rests on a document that expires annually and can simply not be renewed.
Your registered office is on your certificate of incorporation, your PAN, your GST registration and your bank records. Changing it is a filing with its own process. Building it on an eleven-month footing to save a registration fee is a poor trade — see registered office vs virtual office in India.
3. Stamping
Separate from registration, and separately fatal if missed.
An unstamped document is inadmissible as evidence in court, and penalties for under-stamping can reach 10 times the deficient amount under Section 40 of the Indian Stamp Act.
Registration is separate from stamping and carries its own fee, typically a small percentage of the rent and deposit. Stamping pays the duty on the instrument; registration records the document in the government’s register and is the stronger form of legal protection.
3.1 The rates vary by state
In Karnataka, stamp duty runs from 0.1% to 2% of total rent depending on tenure, with a registration fee of 1% of the deposit subject to a maximum of ₹10,000.
Every state sets its own rates and its own basis of computation — some on rent, some on rent plus deposit, some scaling with the term. Do not assume the figure quoted for one city applies in another.
3.2 E-stamping
E-stamping through SHCIL is now the standard across most states, with mandatory digital stamping from July 2025 carrying a ₹5,000 penalty for non-compliance.
For a foreign tenant, the practical point is that the stamping is done before or at execution, on the instrument, at the correct value. A document executed first and stamped later, or stamped at the wrong value, is the situation Section 40 addresses.
3.3 Who pays
Negotiable, and frequently split. Whatever is agreed should be written into the document, because the party that ends up paying is otherwise decided by whoever is holding the pen at signature.
4. The security deposit
The number foreign tenants most underestimate, and the one most worth negotiating.
Security deposits generally fall between 6 and 10 months of rent.
4.1 What it actually costs
It is not an expense. It is working capital removed from the business, interest-free, for the life of the lease, and recoverable only if the landlord agrees to return it.
For a foreign group funding an Indian subsidiary with capital remitted from overseas, that capital sits in a landlord’s account rather than the business. For a subsidiary in its first year with no revenue, it can be a meaningful fraction of the initial funding.
4.2 What to negotiate
| Point | Why |
|---|---|
| The number of months | The starting ask is not the market floor; it is the opening position |
| Payment in tranches | Part on signature, part on possession, rather than everything upfront |
| Refund timeline, in days | “On vacating” is not a timeline; “within 30 days of handover” is |
| What may be deducted, exhaustively | An open-ended right to deduct is a right to keep |
| Interest on delayed refund | Gives the landlord a reason to pay on time |
| No set-off against disputed items | Prevents the deposit becoming leverage in an unrelated dispute |
| Adjustment against final months | Sometimes accepted; converts a refund risk into a rent holiday |
4.3 The refund clause is the whole clause
Every deposit dispute we see turns on the same two things: how long the landlord has to refund, and what he may deduct.
A clause saying the deposit is refundable “after adjustment of dues” with no timeline and no list is not protection. Fix both, in the document, before signature.
5. Lock-in
Lock-in period: standard practice in commercial leases is typically 12 to 36 months.
After lock-in, either party gives notice, typically 1 to 2 months. Violations result in forfeiture of deposit or equivalent penalty.
5.1 What leaving early actually costs
You will typically lose part or all of your deposit, and may still owe rent for whatever is left of the lock-in — it depends heavily on how the exit clause is worded.
Both, in other words. A group that takes a five-year lease with a thirty-six-month lock-in and leaves at month eighteen may forfeit the deposit and owe eighteen months of rent.
For a foreign group testing the Indian market, that is a commitment that should be sized against the business plan rather than against the office.
5.2 What to negotiate
A shorter lock-in. The starting ask reflects the landlord’s fit-out contribution and void risk. Where the tenant is funding its own fit-out, the case for a long lock-in is weaker.
A mutual lock-in. If you cannot leave for thirty-six months, the landlord should not be able to terminate for convenience either.
A break option. A right to exit at a defined point on defined notice and a defined payment, so the cost of leaving is known rather than litigated.
An assignment or sublet right. Even a right subject to landlord consent not to be unreasonably withheld gives you a route out that the lock-in otherwise closes. This matters more for a foreign group than for a domestic tenant, because a group restructuring may need to move the lease between entities.
Cap the exit liability. Where a lock-in cannot be shortened, agree what leaving costs — a fixed number of months rather than the balance of the term.
5.3 Read the exit clause against the lock-in clause
These are usually two separate provisions, and they frequently do not agree with each other.
One says the lease may be terminated on two months’ notice. The other says no termination during the lock-in. A third says the deposit is forfeited on early termination. Reconcile them into one coherent exit mechanic before signing, because that is when it is cheap to do.
6. There is no statutory protection
Foreign tenants sometimes assume a floor of tenant protection exists. For commercial premises, largely it does not.
Notice period: typically 1 to 3 months, negotiated, with no statutory protection for commercial tenants.
The Karnataka Rent Control Act, 2001 does not apply to commercial properties — only residential.
State rent control legislation generally protects residential tenants. Commercial tenancies are governed by what the parties agreed.
The consequence is simple and it should shape how the document is reviewed: whatever is not in the lease is not yours. There is no background body of commercial tenant rights to fall back on.
7. GST on rent
GST on rent: 18% GST is applicable when the landlord’s annual turnover exceeds ₹20 lakh.
7.1 It is recoverable, but it is still cash
Where the tenant is making taxable supplies, GST on rent is input tax credit and is recoverable in the ordinary course.
Where the tenant is an exporter of services supplying zero-rated under a Letter of Undertaking — which most foreign-owned captive subsidiaries are — the credit accumulates and is claimed as a refund. That refund depends on the export realisation trail being complete, which is a different compliance entirely.
See software export invoicing and SOFTEX filing.
7.2 Check whether the quoted rent includes it
A rent quoted “plus taxes” and a rent quoted inclusive are different numbers. Establish which you are being offered before comparing options, and put it in the document.
8. CAM and the real rent
Tenants pay CAM charges on top of the base rent in most cases, not included in it.
Common area maintenance covers the building’s shared services — security, lifts, common electricity, cleaning, upkeep. It is charged per square foot and it is a substantial addition to base rent, not a rounding item.
8.1 What to establish before comparing buildings
- The current CAM rate per square foot, in writing
- Whether it is capped, and how often it can be revised
- What it covers, and what is billed separately
- How electricity and air conditioning are charged — metered, apportioned, or included
- Whether parking is included or charged per bay
- Whether the building charges for after-hours air conditioning, which matters for a team working to overseas hours
That last point is specific to foreign-owned captives. A team working US or European hours uses the building outside standard operating times, and buildings that charge for it can add materially to the monthly cost.
8.2 The chargeable area question
Indian commercial space is typically let on a super built-up basis, which includes a share of common areas. The usable area can be materially less than the area you are paying for.
Establish the carpet area, the built-up area and the chargeable area, and compare buildings on carpet area per person rather than on headline rent per square foot. Two buildings at the same rate can differ substantially in what you actually get.
9. Title and authority
Documents to verify before signing: property title, past lease history, occupancy certificate, and confirmation that the landlord actually has the legal right to lease the space out.
That last item is not theoretical. Indian commercial property is frequently held through family arrangements, partnerships and entities with co-owners, and the person negotiating is not always the person entitled to grant a lease.
9.1 What to check
| Item | Why |
|---|---|
| Title documents | Establishes ownership and the chain to the current owner |
| Authority of the signatory | A board resolution, partnership authority or power of attorney where the landlord is not an individual owner signing personally |
| Co-owners | Where property is jointly held, all co-owners should be party or have authorised the grant |
| Occupancy certificate | Confirms the building may lawfully be occupied |
| Permitted use | The premises must be usable for commercial office purposes under local approvals |
| Encumbrances | Whether the property is mortgaged, and whether the lender’s consent is needed |
| Past lease history | Prior tenancies and how they ended |
| Society or association approvals | Where the building is managed by an association with its own rules |
9.2 The mortgage point
Where the property is mortgaged, a lease granted without the lender’s consent can be vulnerable if the lender enforces. For a tenant spending on fit-out and treating the address as its registered office, that is worth establishing rather than assuming.
10. Fit-out and reinstatement
The clause that costs money at the end rather than the beginning.
| Point | What to establish |
|---|---|
| Fit-out period | Rent-free, and long enough — Indian fit-out timelines are rarely short |
| Landlord approvals | What needs consent, and how long the landlord has to give it |
| Base condition | What the landlord delivers — warm shell, bare shell, or fitted |
| Reinstatement | Whether you must restore the premises at the end, and to what condition |
| What stays | Whether fixtures become the landlord’s, and whether you are paid for them |
| Condition record | Do a proper fit-out inspection before moving in, and get the space condition documented in writing |
10.1 Reinstatement is the deposit’s enemy
An unqualified obligation to restore the premises to their original condition, combined with a deposit the landlord holds and a right to deduct, is where deposits disappear.
Negotiate it. Common landing points are reinstatement of structural alterations only, or a fixed payment in lieu, or an agreement that the fit-out stays and no reinstatement is required.
10.2 Photograph everything
A dated photographic record of the premises at handover, agreed with the landlord in writing, is the cheapest dispute-prevention measure available. Do it before the fit-out contractor arrives.
11. The lease is an India-entry document
For a foreign-owned subsidiary the lease does four jobs, and only one of them is property.
| Use | What is needed |
|---|---|
| Registered office proof | The agreement, an NOC from the owner permitting use as registered office, and a recent utility bill — all matching on address |
| Bank account opening | Occupancy evidence; banks frequently decline addresses with no lease behind them |
| GST registration | Principal place of business, tested by physical verification in several states |
| Shops and establishments registration | State registration attaching to the premises |
11.1 Ask for the NOC at negotiation, not afterwards
A no-objection certificate permitting use of the premises as the company’s registered office is a routine document that landlords generally provide. It is also easier to obtain while you still have negotiating leverage than after the lease is signed.
Add it to the term sheet.
11.2 Address consistency
The address must read identically on the lease, the NOC, the utility bill and every filing. Plot numbers, floor references, building names and pin codes all have to match, because a mismatch across three documents is a resubmission at incorporation and a query at the bank.
See opening a bank account for your Indian subsidiary.
12. What to negotiate, in order
If you can only move a landlord on a few points, move him on these.
- Security deposit — months, tranches, refund timeline in days, and an exhaustive deduction list
- Lock-in — length, mutuality, a break option, and a capped exit cost
- Reinstatement — limited, or paid in lieu, or waived
- Escalation — the percentage and the frequency, and whether it compounds
- CAM — the current rate, what it covers, and a cap on increases
- Assignment and subletting — at least to group companies without consent
- Fit-out period — rent-free and realistic
- The registered office NOC — in the term sheet
12.1 The escalation point
Indian commercial leases typically escalate, commonly around 5% annually or 15% every three years. Whether it compounds and from what base makes a substantial difference over a nine-year term.
Model it across the full term before agreeing to it. A number that looks small annually is not small by year eight.
13. Two situations, worked through
Scenario A — The deposit that did not come back
A European group takes a floor in Gurugram on a five-year lease, ten months’ deposit, thirty-six-month lock-in. To save cost, the agreement is executed for a term and never registered.
What happened. The group consolidated its India operations at month forty and vacated. The landlord deducted for reinstatement, for alleged damage, and for dues the group disputed, and returned about a third of the deposit.
The position. An unregistered lease exceeding twelve months is inadmissible as evidence. The group’s document was not one a court would look at, and it had ₹40 lakh at stake.
What would have changed it. Registration, at a cost of well under a month’s rent. A refund timeline in days. An exhaustive deduction list. And a photographic condition record at handover.
Scenario B — The lock-in that outlasted the plan
A US group takes a nine-year lease with a thirty-six-month lock-in for a team it expects to grow from fifteen to sixty. Growth does not materialise, and at month twenty the group decides to move to managed space.
The cost. Forfeiture of the deposit, plus sixteen months of rent for the balance of the lock-in, because the exit clause and the lock-in clause together produced both.
What would have helped. A break option at month twenty-four on defined notice and a capped payment. Or an assignment right allowing the space to be passed on. Or a shorter initial term, given the group was still testing the market.
The principle. Size the property commitment against the business plan, not against the space you liked.
14. Twelve mistakes
- Budgeting a Western-style deposit. Six to ten months is the Indian norm and it is working capital, not an expense.
- Not registering a lease over twelve months to save fees, leaving the document inadmissible in evidence.
- Believing the registration threshold is eleven months. It is one year; eleven months is the convention that results from it.
- Using an eleven-month agreement for a registered office, putting your incorporation address on an annually expiring footing.
- Assuming Maharashtra follows the national pattern. There, even leave and licence agreements must be registered.
- Under-stamping, where penalties can reach ten times the deficient amount.
- Not reconciling the lock-in clause with the exit clause, so early departure costs both the deposit and the balance of rent.
- Accepting an unqualified reinstatement obligation alongside a landlord-held deposit and an open deduction right.
- Comparing buildings on headline rent without CAM, chargeable area and after-hours charges.
- Not verifying the landlord’s authority to lease, particularly where the property is jointly held or mortgaged.
- Leaving the registered office NOC until after signature, when the leverage has gone.
- Expecting statutory protection. Commercial tenants have none; whatever is not in the lease is not yours.
15. Checklist
Before the term sheet
- Property commitment sized against the business plan, not the space
- Structure decided — lease or leave and licence — against fit-out spend and term
- Registration position established for the state and the intended term
- Stamp duty basis and rate established for the state
- Total occupancy cost modelled: base rent, CAM, GST, parking, after-hours charges
- Comparison run on carpet area per person, not headline rate
Diligence
- Title documents reviewed and the chain to the current owner established
- Signatory’s authority evidenced — resolution, partnership authority or power of attorney
- All co-owners party or consenting
- Occupancy certificate obtained
- Permitted use confirmed for commercial office purposes
- Encumbrances checked; lender consent obtained where mortgaged
- Society or association rules and approvals reviewed
Negotiation
- Deposit: months, tranches, refund within a stated number of days, exhaustive deduction list, interest on delay
- Lock-in: length, mutual, break option, capped exit liability
- Escalation: percentage, frequency, and whether it compounds — modelled across the full term
- CAM: current rate in writing, coverage, cap on increases
- Reinstatement: limited, paid in lieu, or waived
- Assignment and subletting: at minimum to group companies
- Fit-out: rent-free period, base condition, approval timelines
- Registered office NOC included in the term sheet
- Notice period and its interaction with lock-in resolved into one mechanic
Execution and after
- Stamped at the correct value before or at execution, through the state’s e-stamping route
- Registered where the term exceeds one year, or where the state requires it regardless
- Address identical across lease, NOC, utility bill and every filing
- Dated photographic condition record agreed in writing before fit-out begins
- Renewal, escalation and break dates diarised
- Shops and establishments registration completed for the premises
Reviewing an India lease drafted by the landlord?
It will be. Indian commercial leases are landlord documents, and the points that cost a foreign tenant most — deposit refund, lock-in, reinstatement — are all negotiable before signature and none of them afterwards. Send us the draft and the term sheet and we will mark up what matters, tell you what is standard and what is not, and flag anything that will cause a problem at the bank or at GST registration.
16. Frequently asked questions
Q1. What security deposit is normal for a commercial lease in India?
Six to ten months of rent is the typical range for office space, which surprises tenants from markets where two or three months is standard. It is interest-free and held for the life of the lease, so it is working capital removed from the business rather than an expense. The number, the payment schedule and the refund terms are all negotiable.
Q2. What is a typical lock-in period?
Twelve to thirty-six months is standard practice in commercial leases. Leaving inside it typically means forfeiting part or all of the deposit and may also mean owing rent for the balance of the lock-in, depending on how the exit clause is worded. Both consequences can apply together.
Q3. When must a commercial lease be registered in India?
Where the term exceeds one year. Section 17(1)(d) of the Registration Act, 1908 requires registration of leases from year to year, for any term exceeding one year, or reserving a yearly rent. This is not optional, and it applies to commercial premises as much as residential.
Q4. Is the registration threshold eleven months or twelve?
Twelve. The statutory line is one year, and the eleven-month convention exists precisely because eleven months sits under it. Guidance that states the threshold as “exceeding eleven months” inverts cause and effect, and obscures that a twelve-month agreement is registrable while an eleven-month one is not.
Q5. What happens if a long lease is not registered?
It cannot be admitted as evidence in court. If a dispute arises over rent, eviction or refusal to refund the deposit, you have no legally enforceable position on the document. For a tenant with six to ten months’ rent on deposit, that is the strongest argument for registering, and it usually costs less than a month’s rent.
Q6. What is the difference between a lease and a leave and licence?
A lease is governed by the Transfer of Property Act, 1882 and creates an interest in the property with tenancy rights. A leave and licence is governed by the Indian Easements Act, 1882 and grants temporary permission to use without legal possession, so a licensee cannot claim tenancy rights. Landlords generally prefer licences for that reason.
Q7. Which should a foreign tenant prefer?
It depends on commitment. For a small serviced or managed space taken for a year or two with minimal fit-out, a licence is normal and the reduced security matters little. For a floor with significant fit-out spend that will be the registered office for years, negotiate for a lease or for licence terms giving equivalent protection on quiet enjoyment, notice and non-revocability.
Q8. Does Maharashtra follow the same rules?
No. In Maharashtra even leave and licence agreements must be registered, so the eleven-month structure does not avoid registration there in the way it may elsewhere. Property practice varies significantly by state and the position should be checked for your city rather than assumed from a national summary.
Q9. What happens if a lease is not properly stamped?
An unstamped document is inadmissible as evidence, and penalties for under-stamping can reach ten times the deficient amount under Section 40 of the Indian Stamp Act. Stamping is separate from registration — stamping pays duty on the instrument, registration records it in the government register.
Q10. How does e-stamping work?
E-stamping through SHCIL is now standard across most states, with digital stamping mandatory from July 2025 and a ₹5,000 penalty for non-compliance. The practical requirement is that the instrument is stamped at the correct value before or at execution, rather than executed first and regularised later.
Q11. Is GST payable on commercial rent?
Yes, at 18%, where the landlord’s annual turnover exceeds ₹20 lakh. It is recoverable as input tax credit where the tenant makes taxable supplies. For an exporter of services supplying zero-rated under a Letter of Undertaking, the credit accumulates and is claimed as a refund, which depends on the export realisation trail being complete.
Q12. What are CAM charges?
Common area maintenance covers the building’s shared services — security, lifts, common electricity, cleaning and upkeep — charged per square foot and payable on top of base rent in most cases, not included in it. It is a substantial addition rather than a rounding item and should be established in writing before comparing buildings.
Q13. What is chargeable area and why does it matter?
Indian commercial space is typically let on a super built-up basis that includes a share of common areas, so usable space can be materially less than the area you pay for. Establish carpet, built-up and chargeable areas, and compare buildings on carpet area per person rather than on headline rent per square foot.
Q14. Do commercial tenants have statutory protection in India?
Largely no. Notice periods are negotiated, typically one to three months, with no statutory protection for commercial tenants, and state rent control legislation generally covers residential premises only — the Karnataka Rent Control Act, 2001, for example, does not apply to commercial property. Whatever is not in the lease is not yours.
Q15. What should be verified before signing?
Property title and the chain to the current owner, the signatory’s authority where the landlord is not an individual owner, consent of all co-owners where jointly held, the occupancy certificate, permitted use for commercial office purposes, any mortgage and whether the lender’s consent is needed, past lease history, and any society or association approvals.
Q16. Why does the landlord’s authority matter so much?
Because Indian commercial property is frequently held through family arrangements, partnerships and entities with co-owners, and the person negotiating is not always the person entitled to grant a lease. For a tenant spending on fit-out and using the address as its registered office, this is worth establishing rather than assuming.
Q17. What is reinstatement and why does it matter?
An obligation to restore the premises to their original condition at the end of the term. Combined with a landlord-held deposit and an open right to deduct, it is where deposits disappear. Negotiate it down to structural alterations only, a fixed payment in lieu, or an agreement that the fit-out stays and no reinstatement is required.
Q18. How do we protect the deposit at handover?
A dated photographic record of the premises agreed with the landlord in writing before the fit-out contractor arrives, a refund timeline expressed in days rather than “on vacating”, an exhaustive list of permitted deductions, and interest on delayed refund. Those four items resolve most deposit disputes before they start.
Q19. Can we assign or sublet the space?
Only if the lease says so. Negotiate at minimum a right to assign to group companies without consent, and ideally a broader right subject to consent not unreasonably withheld. For a foreign group this matters more than for a domestic tenant, because a restructuring may require the lease to move between entities.
Q20. How does the lease affect our incorporation and bank account?
Substantially. The lease is occupancy evidence for the bank, address proof for incorporation, and what a GST officer looks for on physical verification. Banks frequently decline addresses with no lease behind them, and address details must read identically on the lease, the NOC, the utility bill and every filing.
Q21. What is a registered office NOC and when should we ask for it?
A no-objection certificate from the property owner permitting use of the premises as the company’s registered office. It is a routine document landlords generally provide, and it should be in the term sheet — it is far easier to obtain while you still have negotiating leverage than after the lease is signed.
Q22. What should we negotiate first?
The security deposit and the lock-in, because they are the two largest commitments and both are movable. Then reinstatement, escalation and CAM, then assignment rights, the fit-out period and the registered office NOC. All of these are negotiable before signature and none of them afterwards.
Related reading
- Registered office vs virtual office in India — what the address has to satisfy, and for whom
- Opening a bank account for your Indian subsidiary — why the bank wants to see a lease
- Step-by-step guide to forming a foreign company in India — where the address sits on the critical path
- Drafting and vetting of agreements — reviewing a landlord’s draft before signature
Talk to us before you sign the term sheet
Delhi Legal Company works exclusively with foreign companies establishing and operating in India. Lease review and negotiation, title and authority diligence, stamping and registration, and the incorporation, banking and GST workstreams the address feeds into — handled together, because the lease is an India-entry document as much as a property one.
How we usually start. Send us the draft lease or the term sheet, and tell us the city, the term and what your India headcount plan looks like. We come back with a marked-up document, a view on what is market and what is not, and a note on anything that will cause a problem at incorporation, at the bank or at GST registration.