[ecis2016.org] A leave and license agreement allows one party to allow another party the usage of their immovable assets
What is a leave and license agreement?
A leave and license agreement is a legal document that enables one party to allow another party to use their immovable assets, i.e., property, for a specific period without any change in the ownership of the asset. Leave and license agreements are commonly used among landlords and tenants in India, especially in the rental housing segment. In the commercial realty segment, however, the use of lease agreements is more common.
You are reading: What is a leave and license agreement? Definition and format explained
A lease creates in favour of the tenant an exclusive interest in the property, while a leave and license agreement does not create any interest in the property towards the tenant.
Also read all about the Draft Model Tenancy Act 2019
Differences between lease and leave and license agreement
- A lease creates an interest in the property, unlike a leave and license agreement.
- A lease grants a tenant with exclusive possession, while a leave and license agreement only grants permission to occupy the property.
- Licenses are revocable; leases are not.
- Leases are not determined by the grantor, while licenses are.
- Leases are transferable while licenses are not.
- A lease creates inheritable rights, unlike licenses.
[ecis2016.org] Differences between leases and rental agreements
Leave and license agreement: The legal definition
While various courts have, from time to time, elaborated on the legal concept, the basis of the leave and license agreement is found in the Indian Easements Act, 1882.
“Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in the property, the right is called a license,” reads Section 52 of the Indian Easements Act.
According to the Supreme Court (SC), if a document gives only a right to use the property in a particular way or under certain terms, while it remains in the possession and control of the owner thereof, it will be a license. Basically, no interest in the property is transferred to the tenant.
“The legal possession, thereof, continues to be with the owner of the property but the licensee is permitted to make use of the premises for a particular purpose. But for this permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property,” the SC said.
Since no easement right is granted, the landlord can revoke the permission granted to the tenant at will. In cases where the landlord wants to let out his property for short periods, working out a rental agreement format on the basis of a leave and licence agreement, gives them the freedom to do so. This is also beneficial for the tenant, as they do not have to serve long notice periods to vacate the place.
Also read all about Maharashtra rent agreement stamp duty and registration laws
Leave and license agreement online
These days, one can easily get a leave and license agreement online through various relevant websites.
Leave and license agreement format
Here is a basic leave and license agreement format:
Leave and license agreement agreement
Read also : Why should landlords and tenants opt for online rental agreements?
This rent agreement is made on this __________ (date) by ________________ (name of the landlord) S/o _______________ (father’s name of the landlord), Address: ___________________________________________________ (residential address of the landlord). Hereinafter called the Lessor/Owner, and first party
AND
_____________________________ (Name of tenant), called lessee/tenant, or second party
The expression Lessor/Owner and the Lessee/Tenant shall mean and include their legal heirs successors, assigns, representatives etc.
Whereas the first party is the owner and in possession of the property No: _______________________________________________________________________________________________ (address of rented property) and has agreed to let out the said property to the second party for a monthly rent of Rs. ______/- (in words) per month.
Now This Rent Agreement Witness As Under:
That the second party will have to pay Rs. ______/- (in words) as monthly rent, which does not include electricity and water charges.
That the second party shall pay one month rent in advance to the landlord that would be further adjusted in the monthly rent.
That the second party shall pay the water and electricity charges on the basis of the consumption to the landlord/owner.
That the second party shall not lease the property to a subtenant under any circumstances without the consent of the owner/landlord.
That the second party shall follow all the rules and regulations, by-laws set by the local authorities in respect of the leased property and will not get involved or do illegal activities in the leased property.
That this rent agreement is granted for a period of eleven (11) months starting from ___________, and this contract can be extended further with the mutual consent of both the parties.
That the second party shall not be permitted to do a construction in the rented premises. Besides, he/she could do the installation of temporary decoration, wooden partition/cabin, air conditioners etc. without seeking the permission of the landlord.
That the second party is not allowed to make any alteration in the rented property without the written consent of the owner.
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That the second party will have to allow the landlord or his authorized agent to enter in to rented premises for its inspection or general checking for any repair work, if needed.
That the second party shall keep the premises clean.
That the second party shall bear the cost of day to day minor repairs.
That this contract/agreement could be revoked before the expiry of this tenancy period by serving one month prior notice.
That both the parties have read and understood this agreement and have agreed to sign the same without any pressure from any side.
In WITNESS WHEREOF
The landlord and the tenant have hereunto subscribed their hand at ______ (place) on this the _____________ (date of rent agreement) year first above mentioned in presence of the following witnesses.
Witnesses:
1.
2.
___________ (name of the landlord) _________________ (name of the tenant)
Lessor Lessee
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Leave and license agreement FAQs
Is leave and license agreement same as rent agreement?
A leave and license agreement is governed by the Indian Easement Act, 1882 and is different from a rental or lease agreement.
What is the meaning of leave and license agreement?
A Leave and Licence agreement grants the Licensee the right to occupy the licensor’s property, where in the absence of such permission, such a right would be illegal.
Why leave and license agreement is for 11 months?
Under the Registration Act, 1908, it is mandatory to register a rental agreement if period is more than 12 months. Hence, to avoid stamp duty and registration charges, leave and licence agreements are usually for 11 months.
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Category: Property Trends
