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Do we have to pay brokerage every year in Mumbai, India?


04-Jul-2024 (In Property Law)
I rented an apartment last year with the help of a person I considered to be the broker. After deciding on an apartment, our broker introduced us to a firm that manages the property for the owner, who resides in Dubai. We signed the rental agreement directly with the landlord as tenants and paid our broker one month's rent as brokerage fees. Now, when it's time to renew the rental agreement, the property management firm contacted us, stating that we need to sign a new agreement and pay them a brokerage fee of Rs. 5,000. Are they justified in asking for brokerage fees for the renewal of rental agreements? Nowhere in our agreement does it state that they act as our brokers, and this was never verbally communicated to us either. We have informed the firm that they have always acted as property managers for the absentee owner, with no indication in any communication that they are our brokers.Do we have to pay brokerage every year?
Answers (3)

Answer #1
443 votes

In Mumbai, the responsibility for paying the broker's fee (brokerage) when renting a property is flexible and negotiable. Traditionally, tenants pay brokerage equivalent to one month's rent, but in some cases, the landlord may share or even bear the entire cost especially if they engaged the broker first.

Brokerage Fees for Rental Agreements:
In India, brokerage is usually a one-time fee paid when a broker helps you find a rental property. You're not legally obligated to pay brokerage every year unless:

  • The broker actively facilitated the renewal, and

  • There's a clause in your agreement stating you'll pay again upon renewal.

If neither is true, they can't demand recurring brokerage.

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Advocate Chikirsha Mohanty

Adv. Chikirsha Mohanty

LawRatoDelhi | 200+ Answers
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Answer #2
947 votes
Until and unless there is any obligation on you to make payment due to an undertaking of agreement you need not have to pay brokerage charges for renewal of yearly agreement. As the broker is not a party to the agreement between you and the owner he has no standing to bind you to pay him the charges.
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Advocate Roopashree R. A.

Adv. Roopashree R. A.

LawRato Bangalore / Bengaluru | 100+ Answers
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Answer #3
777 votes
You may ignore any oral demand. When you receive any demand notice in writing you may revert for appropriate action. You may continue in occupation of the premises by paying rent regularly. You may pay the rents directly to the owner by way of cheque or DVD.
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Advocate G M Paramasiviah

Adv. G M Paramasiviah

LawRatoBangalore / Bengaluru | 25+ Answers
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