The "Leave and License", which is an easement right and is defined and governed u/s 52 of the Indian Easements Act,1882. A 'Leave & License' ensures that there is no transfer of interest from the Licensor to the Licensee. It is License to occupy and use the premises in the mentioned duration on mutually agreed terms. If the Licensee continues to occupy the property upon the cessation of the License or upon the prescribed notice period, they will be considered as unlawful occupants and action initiated against them for immediate eviction.
A leave and license agreement is synonymous with a rental arrangement. Simply put, a leave and license is an understanding, where one party (the owner, called the ‘licensor’) gives a limited right to use his premises to the other party (called the ‘licensee’) for a rent. This arrangement is popular since it creates no lasting legal rights in favour of the licensee. Compared to a lease agreement a leave and license agreement has limited authority with regards to the property.
A property owner wishes to generate income from the asset by letting it out on rent. At the same time, the owner may also be concerned about implications under the tenancy laws. These laws, in certain cases, give legal rights in the premises to the licensee. Leave and license is a way in which the owner can put the premises to good use without the fear of losing it. However, for this, it is necessary that the leave and license agreement is drafted carefully and is registered with the government. If this is not done properly, legal rights in the property may be claimed by the licensee and the property may be locked up in litigation for a number of years.
It is essential that you engage a good lawyer to carefully draft your leave and license agreement and guide you with payment of stamp duty and registration. If the agreement is not drafted well then there are chances the licensee may play mischief by claiming legal right over your property and this may lead to the property be locked up in litigation for a number of years.
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.
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.