Section 107 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 107 answers a question every landlord and tenant faces: does this lease need to be in a registered document, or can it be oral? The answer depends on how long the lease runs and how the rent is reserved. This article explains the rule, the signing requirement and the State's power to relax it, as per the text of the Act consulted.
A lease from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases can be made by a registered instrument or by an oral agreement with delivery of possession. Where a registered instrument is used, both lessor and lessee must execute it. The State Government may, by notification, allow some other leases to be made by an unregistered instrument or an oral agreement without possession.
Source and State note
The text consulted is a publisher's print of the Act showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003); later amendments should be checked. Section 107 is printed with its number in square brackets and with later paragraphs also in brackets, which marks inserted or substituted wording. The copy also shows "[ *]" inside the proviso, which marks omitted words. Some States have amended the Act or made local rules, and the position in your State on leases should be checked; nothing from any State is described here.
Registration fees and stamp duty are not in this Act. For the registration process, see our guide on how to register a lease or rent agreement, and for the stamp duty position see our stamp duty guide for lease and rent agreements. To have a lease drafted properly, our agreement drafting service can help.
The first paragraph: leases that need a registered instrument
A lease of immovable property can be made only by a registered instrument if it is:
- a lease from year to year; or
- a lease for any term exceeding one year; or
- a lease reserving a yearly rent.
The wording is "can be made only by a registered instrument". That means an oral lease, or an unregistered document, does not fit these three kinds, on the face of the text. Any one of the three features is enough. A three-year lease at a monthly rent still has a term exceeding one year. A lease from year to year with a monthly payment still falls in the first limb.
The second paragraph: all other leases
"All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession." So a short lease, for a term of one year or less, with no yearly rent, can be oral, but only if possession is handed over.
| Kind of lease | How it can be made |
|---|---|
| From year to year | Registered instrument only |
| Term exceeding one year | Registered instrument only |
| Reserving a yearly rent | Registered instrument only |
| Any other lease | Registered instrument, or oral agreement with delivery of possession |
Month-to-month tenancies are discussed in our article on section 106, which says what happens when no term is stated.
The third paragraph: who must execute
Where a lease is made by a registered instrument, that instrument, or, where there is more than one, each such instrument, must be executed by both the lessor and the lessee. A lease signed by only one party does not meet this paragraph. Execution means signing the instrument; the text consulted does not define it further.
The proviso: State relaxation
The State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property other than the three kinds in the first paragraph, or any class of such leases, may be made by an unregistered instrument or by oral agreement without delivery of possession. The proviso can only relax the rules for the "other" leases; it does not reach year-to-year leases, terms exceeding one year, or leases reserving a yearly rent. Check whether your State has issued such a notification.
How the Registration Act fits in
Section 4 of this Act says that this section is to be read as supplemental to the Registration Act; the point is covered in our article on sections 1 to 4. The Registration Act's own rules on which documents must be registered are in our post on documents compulsorily registrable under section 17. Where to present a document relating to land is dealt with in our article on section 28 of the Registration Act, 1908. Please check the current law for the corresponding provisions.
Worked examples
- Example 1. Priya leases a flat to Sameer for 11 months at a monthly rent and wants it in writing. The term does not exceed one year and no yearly rent is reserved, so the lease may be made by a registered instrument or by an oral agreement with delivery of possession. A written but unregistered document is not one of the two routes that paragraph lists, unless the State has notified otherwise under the proviso, so if a document is wanted, have it registered. Whether the State has notified is something to check.
- Example 2. Arjun leases a shop to Neelam for five years. The term exceeds one year, so a registered instrument is required, and both Arjun and Neelam must execute it.
- Example 3. A lease is described as "from year to year". Whatever the rent, it needs a registered instrument.
Practical points
- Count the term and the rent: if the term exceeds one year, or the rent is yearly, or the lease is year to year, register.
- Both sign: make sure lessor and lessee both execute the registered instrument.
- Oral leases: hand over possession; without it the oral route is not available under the second paragraph.
- Check the State: look for a notification under the proviso.
- Keep a written record of any oral lease: dates, rent and possession handover.
- For specimen lease documents, see the residential and commercial lease deed formats on our site; the residential one is listed under Read next.
Need help drafting or registering a lease?
Getting the form of the lease right from the start avoids later arguments about whether it was valid. Our agreement drafting team can prepare a lease deed that meets section 107 and fits your property.
Key takeaways
- Year-to-year leases, leases exceeding one year and leases reserving a yearly rent need a registered instrument.
- Other leases may be by registered instrument or oral agreement with delivery of possession.
- A registered lease instrument must be executed by both lessor and lessee.
- The State Government may relax the rule for the "other" leases by notification.
- States may have amended the Act or made local rules; check your State.
Read next
- Section 106: duration of lease and notice to quit
- Section 108: duties of the lessor and rights of the lessee
- How to register a lease or rent agreement
- Specimen lease deed for residential property
Disclaimer: Based on a publisher's print of the Transfer of Property Act, 1882 showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003), as consulted on 2 October 2026. State amendments, later amendments, stamp duty and registration charges are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.