What is the Difference Between a Lease & Leave & License Agreement?

Last Updated at: Oct 30, 2020
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Registration of Leave and License Agreement
The Indian Government announced a freeze of rent increases and protections against tenancy terminations. This has been applied as law through the COVID-19 Response (Urgent Management Measures) Legislation Act, which came into effect on 26 March 2020. It has put a restriction on ending a tenancy agreement from 26 March to 25 June 2020. From 26 June, landlords can give the notice to terminate a tenancy under the normal Residential Tenancies Act provisions. Normal notice periods from the day it is given will apply.

 

You don’t sign a lease agreement when you rent a house, even though you often hear people say that they’re on a lease. What is usually signed is a leave and license agreement. This suits the property owner just fine as it gives fewer rights to the tenant. This agreement essentially grants permission to reside within premises, for the duration defined in the agreement, without granting the licensee any stake or interest in the property. The landlord is known as the licensor. A license, as defined under Section 52 (Chapter VI) of the Indian Easement Act, 1882 is an agreement ‘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 a right be unlawful.’ Such agreements can be signed for up to five years, but a time period of 11 months (or more) is common.

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The reason apartments are often licensed for 11 months is that it allows the licensor to remove the tenant with minimum notice, as the Rent Control Act (which favours tenants) does not apply to agreements of less than 12 months. This notice period will be stated in the contract and is usually agreed upon by both parties. Lease agreements give greater rights to tenants, which property owners aren’t comfortable with. Firstly, it gives tenants the right to occupy the property rented for a longer duration. A license, however, gives the tenant the right to merely use the property for a limited time only, thereby ensuring regular renewal of the terms. This regular renewal protects the interest of the property owner, which a lease does not do. Lease agreements potentially encourage tenants to permanently occupy the premises, giving them an interest in the property. Under such circumstances it can be difficult for the landlord to evict the tenant. Different states have their own laws that govern lease agreements, such as Delhi Rent Act 1995, the Maharashtra Rent Act 1999 and Tamil Nadu buildings (Lease and Rent Control) Act 1960.