Leave And Licence Agreement: Know About It In Detail

Leave And Licence Agreement - As there are so many legal terms that needs to be understood before entering into any agreement. There is a Leave and Licence Agreement that basically allows one party to allow another party the usage of their immovable assets.

It is a legal document that is completely validated in the eyes of law and the immovable asset such as property. This agreement is for a specific period without any change in the ownership of the asset. 

These are usually used among landlords and tenants in India specifically in the cases of rental housing segment. But when it comes to commercial realty segment, however, the use of lease agreements is more commonly used.

Why a lease is crafted? It is because a lease is in favour of the tenant for an exclusive interest in the property. Whereas when we talk about leave and licence agreement that is not meant for any kind of interest in the property towards the tenant.

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Let’s Look At The Differences Between Lease And Leave And Licence Agreement

• There is an interest created for the property in a lease unlike in the case of Leave And Licence Agreement.
• In a lease the tenant gets the possession exclusively but in a leave and licence agreement that only grants permission to occupy the property.
• Leases are never revocable but the licenses are cancellable.
• Licenses are determined by the grantor while the leases not determined by the grantor.
• Leases can be easily transferred while licences cannot be.
• A Lease Creates Inheritable Rights, Unlike Licences.

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Legal Definition Of Leave And Licence Agreement

In The Indian Easements Act, 1882, the Leave And Licence Agreement is found on that basis. 

According to the Section 52 Of The Indian Easements Act, “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.”

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As per the Supreme Court (SC), a license is defined as a document that gives only a right for the usage of the property in a specified way or under certain terms, but still it remains in the possession and control of the owner only. In simple words, no interest in the property is transferred to the tenant.

Supreme Court has stated that there will be legal possession of the owner and will continue to with him as the licensee is permitted to make use of the premises for a particular purpose. 

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But still for this permission, his occupation would be unlawful and it will not be created in his favour for any estate or any kind of interest in the property. 

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 on the basis of a leave and licence agreement, gives them the freedom to do so. 

This is surely very beneficial for the tenant, as they do not have to serve long notice periods to get their place vacated.

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FAQ

Q.Is Leave and License Agreement Same As Rent Agreement?

A. Governed By the Indian Easement Act, 1882 the Leave and License Agreement Is completely different from a rental or lease agreement.

Q. 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, but does not give the ownership.  In case of absence of such permission, the possession or rights would be considered illegal.

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Q. Why Leave And License Agreement Is For 11 Months?

A. If the period is more than 12 months then under the Registration Act, 1908, it is mandatory to register a rental agreement. Hence, to avoid stamp duty and registration charges, leave and licence agreements are usually for 11 months.

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