The sale deed is registered. The property is yours. But next month, the tenant's rent still lands in the seller's account.
This is more common than most buyers expect. The fix is a short letter, sent on the right day.
The short answer
When you buy a pre-leased property, the existing lease carries on and you step into the landlord's shoes. But the tenant only pays you once it knows about the sale. An attornment letter is the written notice, usually signed by the seller and you, that tells the tenant who the new landlord is, from which date, and where to pay rent. The tenant ideally signs back to confirm. Without it, rent, TDS, GST and the security deposit can all stay tied to the old owner.
Why it matters to your money
- Fact: Under Section 109 of the Transfer of Property Act, 1882, the buyer of a leased property gets the landlord's rights for as long as the buyer owns it, unless the contract says otherwise.
- Fact: The same section says the buyer is not entitled to rent that fell due before the transfer. It also says that if the tenant pays rent to the old landlord without reason to believe the property was sold, the tenant does not have to pay that rent again to the buyer.
- Fact: Courts have held that the tenant's attornment is not a legal condition for the buyer to become landlord. The Rajasthan High Court said so in Laxmi Narayan v. Ram Kishan (2014).
So the letter does not make you the owner. It does something more practical. It stops the tenant from paying the wrong person, and it gives you a written record from the tenant's side.
If the tenant keeps paying the seller because nobody told it, your claim is against the seller, not the tenant. That is a slower, harder conversation.
What should move to you on day one
At VRX Capital, yield is not the investment thesis. We look at tenant, lease, cash flow, asset, location, price and exit together. The handover is where cash flow either starts cleanly or leaks. Five things need to move.
1. Rent
The letter should give the effective date and your bank details. Agree in the sale documents how rent for the month of sale is split.
2. TDS on rent
Fact: Under Section 393(1) of the Income-tax Act, 2025, effective 1 April 2026, a tenant paying rent above ₹50,000 a month for land or building deducts TDS at 10%. After the sale, that TDS must be deducted against your PAN. Share your PAN in the letter. Then check that the TDS shows in your annual tax statement, not the seller's.
3. GST on rent
Fact: GST on commercial rent is 18%. Since 10 October 2024, where an unregistered person rents commercial property to a registered person, the tenant pays that GST under reverse charge. Whether you need your own GST registration depends on your turnover and the tenant's status. Your CA should settle this before the first invoice.
4. Security deposit
The letter should confirm the deposit amount and who will refund it when the tenant leaves. We cover this in detail in who refunds the security deposit after you buy.
5. Notices and contacts
Escalation dates, renewal notices and repair requests should now come to you. Give the tenant your address and email for notices under the lease.
Buying a tenanted property and want a second pair of eyes on the handover? Talk to VRX Capital. Call / WhatsApp: +91 9315368515.
Illustrative example
Illustrative example. Not a real property or tenant.
A unit is bought for ₹8 crore. Rent is ₹4,50,000 a month, paid in advance on the 7th. The sale is registered on the 13th of a 30-day month.
| Item | What happens |
|---|---|
| Rent for the month of sale | Already paid to the seller on the 7th |
| Days owned by the buyer that month | 18 of 30 |
| Buyer's share, if the parties agree a day-wise split | ₹4,50,000 ÷ 30 × 18 = ₹2,70,000, settled by the seller |
| TDS at 10% on the next month's rent | ₹45,000, deducted against the buyer's PAN |
| Cash credited to the buyer next month | ₹4,05,000 (before GST, if any) |
Now say no letter goes out. On the 7th of the next month, the tenant pays ₹4,50,000 to the seller again. The tenant has done nothing wrong. The buyer has to recover it from the seller. One letter would have prevented this.
Common mistakes we see
- Treating the sale deed as the end of the job.
- Sending the letter weeks after registration.
- Letting the tenant keep deducting TDS in the seller's PAN.
- No agreed split of the month's rent in the sale documents.
- Not checking that the person who signed the lease is the tenant entity paying rent. See who actually signed the lease.
A habit worth keeping: at VRX Capital, we treat nothing in a deal as confirmed until it is in writing. The handover is no exception.
Attornment letter checklist
- Addressed to the tenant entity named in the lease
- Signed by the seller and the buyer
- Effective date of the change of landlord
- Buyer's name, PAN and bank details for rent
- Security deposit amount and who refunds it
- GST position agreed with your CA
- Address and email for notices under the lease
- Tenant's signed acknowledgement, kept with your lease papers
Before you get to the handover, make sure the lease itself holds up. Read why an unregistered lease weakens a pre-leased property and when your rent actually starts.
FAQ
What is an attornment letter?
It is a written notice to the tenant that the property has been sold. It names the new landlord, the effective date and where rent should be paid. The tenant usually signs to acknowledge it.
Is an attornment letter legally required?
The buyer gets the landlord's rights under Section 109 of the Transfer of Property Act without it. But the tenant is protected if it pays the old owner without knowing of the sale. The letter removes that gap.
Does the tenant need to sign a new lease with me?
Not usually. The existing lease continues. The letter and the tenant's acknowledgement record the change of landlord.
Who sends the attornment letter?
Usually the seller and the buyer sign it together, so the tenant hears it from both sides. Send it as soon as the sale is registered.
What happens to TDS after I buy?
The tenant should deduct TDS on rent against your PAN from the date you become landlord. Check your annual tax statement to confirm it.
This is general information, not legal or tax advice. Please verify the legal, TDS and GST points for your property with a qualified professional.
Talk to VRX Capital
If you are buying a pre-leased property and want the handover planned before registration, we are happy to help. See For Investors or contact us.
Call / WhatsApp: +91 9315368515
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