PG Accommodation Agreement Format: Clauses and Deposits

A paying guest arrangement usually starts with a WhatsApp message and a security deposit paid by UPI. The "agreement" is a page from a notebook listing the monthly charge and the deposit, signed by the owner and the tenant, sometimes with no date and no address of the property. Three months later the tenant wants to leave with fifteen days' notice and the owner says the deposit is forfeited because the agreed stay was six months. Neither can point to a clause, because there is none.

Paying guest accommodation sits awkwardly between a hostel, a licence and a tenancy. It has its own commercial logic — a furnished room, meals, housekeeping and shared facilities — and its own dispute pattern. This guide gives you a working pg accommodation agreement format, the clauses that prevent the usual fights, and the legal character you should choose.

Is a PG a licence or a tenancy?

In most paying guest arrangements, the occupier gets a room, sometimes shared, with furniture, housekeeping and meals, and the owner or manager retains access and control over the premises. That combination points towards a licence — permission to use a portion of the premises with services — rather than a lease. The licence character is strongest where the owner retains keys, provides meals and housekeeping, and can shift the guest to another room in the same building.

The character weakens when the guest gets a self-contained room or floor with a private entrance, a lock only he holds, and pays a fixed monthly amount with no services. At that point a court may treat it as a tenancy, with the notice requirements and Rent Act consequences that follow. Since most PG businesses operate room by room with shared facilities, a licence agreement is the honest description and the better commercial fit.

The PG accommodation agreement format, section by section

Parties, room and sharing

Name the owner or the operator of the PG as the licensor, and the guest as the licensee. Identify the premises with the full address and the specific room number, and state whether it is single, double or triple sharing and what furniture and fixtures are provided. If the guest is sharing, say how the room charge is split and what happens if a co-occupant leaves. This is the most common source of mid-term disputes in shared accommodation, because the remaining guest is suddenly asked to pay the full room rent.

Charges: rent, food, utilities and extras

List every charge separately: the monthly accommodation charge, the meals charge and whether meals are optional, electricity and water charges and whether they are included or billed on sub-meter, and any one-time charges such as maintenance or housekeeping. State the due date and the late payment consequence. A single lump sum figure without a breakup lets the owner increase one component later without appearing to increase the rent, which is the classic PG grievance.

Deposit and refund

State the deposit amount, what it may be adjusted against — unpaid charges, damage to furniture or fixtures beyond normal wear, missing inventory, unpaid utility bills — and the period within which the balance must be refunded after the guest vacates and the room is inspected. A period of seven to fifteen days is reasonable. Add that the deduction must be supported by bills or a written estimate. Without these words, the deposit becomes a retention that the owner decides on unilaterally.

Term, notice and vacation

Fix the licence period, the minimum stay, and the notice period on both sides. A common structure is a minimum stay of one to three months, a notice period of fifteen to thirty days after the minimum stay, and a shorter notice during a trial period. State what happens to the deposit if the guest leaves before the minimum stay, and what happens if the owner asks the guest to leave. Both directions should be symmetric, or the agreement will read as one-sided.

House rules and conduct

Attach a house rules schedule covering visitor hours, quiet hours, smoking, alcohol, cooking, laundry, parking, and the consequences of repeated breach. House rules are enforceable as terms of the licence if they are attached and signed. Rules imposed verbally after the guest has moved in are not. If the PG separates accommodation by gender or has restrictions on guests, say so in the schedule, because a surprise restriction is a frequent cause of early exit and deposit fights.

Clause checklist for a PG agreement

Stamp duty and registration for a PG agreement

A PG agreement is usually a short licence. In states that charge stamp duty on licence agreements, the duty depends on the licence fee and the term, and a short agreement often attracts a small fixed duty. In Maharashtra, licence agreements including PG arrangements are chargeable and require registration; other states may treat a short licence as registrable only above a threshold, or not require registration at all.

The practical approach is to execute on stamp paper of the value your state's schedule prescribes and, where registration is compulsory, register it. An eleven-month agreement on insufficiently stamped paper is not fatal, but it will be impounded if produced in a dispute. For a business running multiple rooms, keep a template that is checked against the current schedule and review it when the state budget changes the rates.

Signing, payments and the paper trail

Sign two originals, one for the guest and one for the operator, and sign each page rather than only the last. Record the date of joining, the room number, the charges agreed and the deposit paid in the agreement itself, and issue a separate receipt for the deposit. Take payment by bank transfer or UPI wherever possible, because a bank statement is the cleanest proof of what was paid and when.

At exit, do the inspection with the guest present, note the condition of the room and the inventory against the joining photographs, and give the guest a written deduction statement even if nothing is deducted. That single document is what stops a deposit dispute from becoming a police complaint or a consumer case, and it takes ten minutes at the counter.

What a PG operator should also keep

Beyond the agreement, keep these records. They cost nothing to maintain and answer almost every dispute before it starts.

• A guest register with ID proof, date of joining, room allotted and date of vacating for each occupant.
• Numbered receipts for every payment, issued from a book or by email, showing the month and the component paid.
• A deduction statement at exit, signed by the guest, listing each deduction and the bill behind it.
• Meal records showing the timings and the days on which meals are not served, so a charge dispute does not become an argument about whether food was provided at all.
• Safety records for the fire extinguisher refill, the electrical inspection and each guest's emergency contact.

Several states require lodging houses and hostels to maintain a guest register and to report certain details to the local police. Confirm whether your state's rules for lodging houses apply to your PG, because the obligation is on the operator and carries its own penalty. Get the register format from the local station and keep it updated weekly rather than reconstructing it during an inspection.

Disputes that end up in court

The disputes that escalate are almost always about money held by the other side: the deposit with the owner, or the last month's charge with the guest. A guest who leaves with a month unpaid and an owner who retains the whole deposit for "cleaning" are the same dispute from opposite sides. Both are avoided by an inspection at joining and at exit, with photographs and a signed statement of the room's condition.

If the guest refuses to vacate after the licence ends, the owner can send a written notice of revocation and apply to the civil court for possession. If the owner refuses to refund a deposit without justification, the guest can send a written demand and, if it is not paid, file a consumer complaint or a small claims suit depending on the amount. In both cases the agreement, the receipts and the photographs decide the outcome.

Frequently asked questions

Is a PG agreement legally valid without registration?

In most states a short licence agreement is valid without registration, though it should be on stamp paper of the prescribed value. Where the state requires registration of licence agreements, an unregistered document cannot be relied on to prove the arrangement. Check your state's rule before you print the template.

Can the PG owner forfeit the entire deposit for early exit?

Only if the agreement says so and the forfeiture is a genuine pre-estimate of loss, such as the rent for the notice period not served. A blanket forfeiture of the whole deposit for leaving early is vulnerable to challenge as a penalty. State the amount retained and the reason in writing.

Does the owner have the right to enter the room?

If the agreement is a licence and the owner has retained the right of access for inspection and maintenance with prior intimation, yes. For a female guest in shared accommodation, the notice requirement and the presence of a housekeeping staff member during entry should be stated in the house rules for everyone's protection.

Who pays electricity in a PG?

It depends on the agreement. Many PGs include electricity up to a cap and charge the excess on a sub-meter. State the cap, the rate per unit and how the meter reading is recorded. A guest who is billed a flat amount for electricity regardless of usage has a fair grievance if the amount rises.

What ID proof should the operator collect?

A government photo identity document and a local address or employment proof, plus an emergency contact. Record the date of joining and the room allotted. This is routine practice and also assists the operator if a guest leaves without notice or if the police enquire about occupancy.

Drafting Support

Our drafting team prepares PG accommodation agreements with the charge breakup, the deposit deduction schedule, the minimum stay and house rules, stamped and registered as your state requires. Send us the room details and the charges and we will draft the agreement and the guest register format.