A leave and licence agreement is a simple legal document that lets a landlord allow someone to use their property for a fixed period without transferring ownership, which is common in residential rentals; in contrast, lease agreements, more often used in commercial real estate, give the tenant exclusive rights to the property, meaning they gain a special interest or control over it.
Landlords are often left to choose between a leave and license agreement and a rent agreement. This is why we have written this definitive guide that can help you understand everything about leave and license agreements. By the end of this article, not only will you get the answer to leave and license agreement vs rent agreement, you’ll also be able to access free leave and license agreement samples that you can view and download for online registration.
What does leave and license agreement mean?
According to the Indian Easements Act, 1882, in the case of a leave and lease agreement, the landlord leaves his property with amenities and offers the same services to the licensee when he is absent (for an agreed time). Once the contract expires and the landlord is back, the licensee has to vacate the property. Thus, the licensee cannot use the property for anything other than what has been mentioned in the agreement. Also, the licensee cannot make any changes to the property while staying on rent.
Leave and license agreement meaning
A leave and license agreement is a legal contract where a property owner grants temporary permission to use his property without transferring ownership or exclusive rights, offering both flexibility and a shorter commitment period compared to traditional leases, which makes it especially popular in residential rentals.
Such an agreement is typically common in states like Maharashtra, especially in Mumbai, where IGR (Inspector General of Registration and Controller of Stamps) provides a facility for the e registration of leave and licence agreement.
This preference stems from the flexibility these agreements offer, allowing landlords to avoid the more stringent provisions of traditional lease agreements.
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.
Leave and license online registration
In India, the process for leave and license agreement registration varies by state. For instance, Maharashtra offers a comprehensive e-registration system through its Department of Registration & Stamps – Inspector General of Registration and Controller of Stamps (IGR) allowing citizens to draft, execute, and register agreements online without visiting a Sub-Registrar Office. This process requires parties to have Aadhaar numbers and involves biometric verification using thumb scanners and webcams. In other states, the availability and specifics of online registration services may differ; it’s advisable to consult the respective state’s registration department or official portals for accurate guidance.
Where can you register leave & license agreement online?
While Maharashtra offers a seamless online registration system for lease and license agreement, other states still follow a largely offline or semi-digital approach. Here’s a comparative look:
| State | Online Portal | Aadhaar Required? | Biometric Needed? | Typical Time to Register |
| Maharashtra | https://efilingigr.maharashtra.gov.in | Yes | Yes (Thumb + Webcam) | 1–3 days (online submission + OTP) |
| Delhi | https://doris.delhigovt.nic.in (for deed reg.) | Optional | Not required | 3–7 days (requires physical visit) |
| Karnataka | https://kaverionline.karnataka.gov.in | Optional | Not required | 2–5 days (partial online, visit SR) |
| Tamil Nadu | https://tnreginet.gov.in | Yes (for e-sign) | Not required | 3–7 days (digital draft + SR visit) |
| Telangana | https://registration.telangana.gov.in | Yes | Not required | 3–5 days (manual + upload scan) |
| Gujarat | https://garvi.gujarat.gov.in | Optional | Not required | 3–7 days (mostly physical process) |
| West Bengal | https://wbregistration.gov.in | Optional | Not required | 5–10 days (physical submission) |
| Kerala | https://keralaregistration.gov.in | Yes (if online route) | Not mandatory | 3–6 days (depends on local SR office) |
| Uttar Pradesh | https://igrsup.gov.in | Optional | Not required | 4–7 days (requires SR office visit) |
Note: Only Maharashtra offers fully paperless registration with biometric verification at home. In most other states, the process is hybrid—online form filling is allowed, but parties must still visit the Sub-Registrar Office for execution and biometric capture.
Documents required for IGR online lease and license agreement
- Aadhaar numbers for all parties and witnesses.
- Access to a biometric device (thumb scanner) and webcam.
- Internet connectivity and a compatible browser (Google Chrome or Microsoft Edge).
Steps to follow for online leave and licence registration
- Visit the e-Registration website provided by your state government.
- Select the district where the property is located.
- Create a unique password for your application.
- Provide comprehensive information about the property, including address and usage.
- For both the Licensor (owner) and the Licensee (tenant), input details such as name, address, Aadhaar number, and contact information.
- Enter details for two witnesses, including their Aadhaar numbers.
- Define the agreement’s duration, monthly rent, and any security deposit.
- The system will compute the necessary stamp duty and registration fees.
- Make the payment online through the Government Receipt Accounting System (GRAS).
- Capture photographs and thumb impressions of all parties and witnesses using a biometric device and webcam.
- After execution, submit the leave and license online registration form.
Know more about leave and license agreement in Hindi
Common glitches during online lease and license agreement registration
Users often face biometric device errors, Aadhaar mismatches, or site timeouts. To resolve, try switching browsers (Chrome or Edge preferred), clear your browser cache, use a wired fingerprint scanner instead of wireless, and double-check Aadhaar details for typos. If the site times out, wait a few minutes and refresh, or try again outside peak hours.
Consequences of not registering leave and licence agreements
One of the biggest mistakes landlords make is relying on an unregistered leave and licence agreement, especially when the duration exceeds 11 months. While parties often use notarised agreements to save on stamp duty and registration costs, the legal risks can far outweigh the savings.
Enforceability in court: An unregistered leave and licence agreement has very limited evidentiary value. Courts may treat it as an informal contract and refuse to enforce its terms strictly. In disputes over rent, eviction, or possession, the absence of registration weakens the landlord’s position.
Risk of tenancy claims: Even if the document is titled “leave and licence,” courts will look at the substance of the arrangement. If the occupant has been in exclusive possession for a long period under an unregistered agreement, they may attempt to claim tenancy rights under state Rent Control Acts. This can turn a simple licence arrangement into a full-fledged tenancy dispute, making eviction extremely difficult.
Stamp duty penalties: If discovered, underpaid or unpaid stamp duty can attract penalties of up to 10 times the deficit amount, along with interest. This increases the financial burden when the agreement is later produced in litigation or for official purposes.
Practical difficulties:
- Banks may not accept unregistered agreements as valid proof of address or rental income.
- Police verification for tenants often requires a registered agreement.
Housing societies in cities like Mumbai and Pune insist on registration to allow new occupants to move in.
Key features of a leave and licence agreement
A Leave and Licence Agreement typically includes the following key features:
- Duration of Occupancy: Clearly specifies the period during which the licensee is authorized to occupy the property, ensuring both parties are aligned on the agreement’s timeframe.
- Rent Amount: Details the rent payable by the licensee to the licensor, along with any applicable taxes or additional fees.
- Permitted Usage: Defines the allowed uses for the property, whether residential or commercial, to ensure it is not used for unauthorized purposes.
- Termination Conditions: Outlines the circumstances under which either party may terminate the agreement, providing a clear process for ending the arrangement.
- Security Deposit: Specifies the amount of the security deposit required from the licensee, offering a financial safeguard for the property owner in case of damage or non-compliance.
Details included in leave and licence agreement
- Plot Number
- Khata Number
- CTS Number
- Milkat Number
- Building Name/Building Number/Floor Number
- Parking Area and Parking Area Unit
- Gallery Area and Gallery Area Unit
- Street or Locality
- Taluka
- City
- Pin Code
- State
- Property type
- Location
- Refundable Deposit
- Non-Refundable Deposit
- Type of rent
- Party that has paid the Stamp and Registration Fees
- Date from the calendar from which the agreement is applicable
- The date at which the agreement terminates
- Monthly Rent
- Party Type: Licensor or Licensee
- Party Category
- Party’s First, Middle, and Last Name
- Gender
- Age
- PAN Number
- Occupation
- E-mail ID
- Mobile number
- ID proof, etc.
Leave and license agreement vs rent agreement
Know all the key differences between a leave and license agreement and a rent agreement. Understanding the differences is crucial for landlords and tenants to ensure the agreement aligns with their needs and legal compliance.
Leave and licence agreement vs rent agreement
| Feature | Leave and License Agreement | Rent Agreement |
| Duration | Generally long-term (fixed period, often one year or more) | Typically short-term (month-to-month, renewable or terminable easily) |
| Flexibility | Less flexible; terms remain fixed for the entire duration | Highly flexible; terms can be modified at the end of each month |
| Legal Binding Nature | Legally binding for the full term with penalties for early termination | Legally binding but can be terminated by either party with short notice |
| Rent Stability | Rent is fixed for the term, offering stability | Rent can be adjusted more frequently based on market conditions |
| Termination | Can only be terminated at the end or for breaches (with penalties) | Can be terminated by either party with proper notice (usually 30 days) |
| Purpose of Use | Preferred for long-term, stable arrangements (e.g., families or businesses) | Suited for short-term needs (e.g., individuals, students, temporary offices) |
| Legal Protection & Rights | Provides more legal protection against arbitrary changes | Offers less protection due to frequent changes and shorter notice periods |
| Transferability | May allow subleasing or transfer with the landlord’s approval | Subletting or transferring is less common due to the short-term nature |
Why should a landlord prefer lease and license agreement over a rent agreement?
Here is why you should always choose a leave and license agreement over a rent agreement:
A Leave and License (L&L) agreement offers significantly better legal clarity and protection than a traditional rental agreement, especially in cities like Mumbai, where it is the preferred format. Unlike a rent agreement, which can create tenancy rights that are difficult to revoke, an L&L agreement only grants permission to occupy the premises, making eviction and possession easier in case of disputes.
To ensure maximum protection:
- Avoid terms like ‘tenant’, ‘landlord’, or ‘rent’ in your document. Instead, use legally neutral terms such as licensor, licensee, license period, and license fee.
- Mandatory registration: Always register the agreement with the sub-registrar, regardless of the duration—even if it’s for 11 months. Only a registered agreement holds legal weight in court.
- Include identity details: Clearly mention PAN and Aadhaar numbers of both parties to avoid impersonation or dispute on identity.
- Get it drafted professionally: Consult a lawyer experienced in property law to ensure the wording prevents future loopholes.
- Longer validity is legal: You can execute an L&L agreement for up to 5 years, with renewal options and annual escalation clauses.
Avoid the myth that 11-month unregistered agreements are safer. In reality, unregistered contracts can be disputed, misinterpreted, or even claimed as oral agreements. A well-worded, registered L&L agreement ensures clear documentation, legal validity, and protection from unlawful occupation.
Why a leave and license agreement makes eviction and repossession faster than a rent agreement?
A leave and license agreement gives the landlord a much stronger position than a rent/lease agreement when it comes to eviction or repossession, because of how the law treats the occupant’s rights.
1. Legal status of occupant
- Leave and license: The licensee has no tenancy rights and no “interest” in the property — they are only allowed to use it temporarily under the licensor’s permission. Once the license period ends or is revoked, their right to occupy ceases immediately.
- Rent/lease: The tenant gains an exclusive right to occupy the property for the term of the lease. Even after expiry, tenants can sometimes invoke Rent Control Acts or tenancy rights to delay eviction.
2. Eviction process
- Leave and license: Since no tenancy rights exist, eviction is usually faster. In states like Maharashtra, registered L&L agreements can be enforced through the competent authority under the Maharashtra Rent Control Act, 1999, instead of going through lengthy civil court proceedings. Possession can often be regained within a few months.
- Rent/lease: Eviction usually requires filing a civil suit, proving breach or grounds under Rent Control laws. This can take years if contested.
3. Flexibility in termination
- Leave and license: The licensor can revoke the license at will if the agreement so provides, or on breach of conditions. The occupant cannot claim protection under Rent Acts.
- Rent/lease: Termination can only be done on specific legal grounds (e.g., non-payment of rent, unlawful use). Even then, courts often favour the tenant’s continued possession until due process is complete.
4. Protection from “holding over”
- Leave and license: If the licensee refuses to vacate after expiry, they are treated as a trespasser. The licensor can seek police assistance or fast-track possession through summary proceedings in states with such provisions.
- Rent/lease: A tenant who “holds over” after expiry may still be protected under tenancy laws, requiring formal eviction suits.
5. Real-world example
If a Mumbai landlord with a registered 11-month leave and license agreement faces a licensee refusing to vacate, they can apply to the competent authority and often regain possession in 3–6 months.
If the same property were under a lease agreement, eviction could take 2–5 years in court, especially if the tenant claims protection under rent control laws.
When is a rent agreement better than a Lease and license agreement?
Here are situations when a rent agreement may be better than a leave and license agreement, in short bullet points:
- Long-term security: Offers better protection from eviction and rent hikes under rent control laws.
- Legal rights: Grants tenants enforceable rights, including protection against arbitrary termination.
- Lower cost escalation: Rent increases are often regulated, preventing sudden hikes.
- Subletting flexibility: Some rent agreements allow tenants to sublet or transfer interest.
- Business stability: Ideal for commercial setups needing long-term location stability.
- Stronger tenant protections: Courts often favour tenants in disputes under lease agreements.
Real-life scenarios where a rent agreement offers better protection:
- Long-term business premises:
Scenario: Ramesh, a textile wholesaler in Bengaluru, plans to run his shop from the same property for 5+ years. By signing a 5-year registered rent agreement, he secures the premises for a long duration. The landlord cannot easily evict him or raise the rent abruptly, as rent control laws protect long-term leases. - Residential stability for families:
Scenario: A family moves to Delhi for their children’s schooling. They want at least a 3-year stay with limited rent hikes. A rent agreement ensures the landlord cannot force them to vacate on short notice, and annual rent increases are capped by law. - Protection against arbitrary eviction:
Scenario: Priya runs a bakery in Mumbai under a 3-year rent agreement. Even if the landlord wants to reclaim the shop, he must follow legal eviction proceedings—which can take months—offering Priya time to plan or contest the eviction. - Subletting and transfer rights:
Scenario: Under a traditional rent agreement, Anil, who operates a coaching center, can sublet part of the space with landlord’s consent, as allowed by the lease. This would not be possible under a leave and license agreement. - Tenant’s rights on property sale:
Scenario: If a landlord sells the property, tenants with a registered rent agreement can continue to stay under the same terms with the new owner, while licensees can be asked to vacate by the buyer at short notice.
Leave and license agreement format
The format of leave and licence agreement typically includes details such as the parties involved, duration, rent, security deposit, maintenance terms, and termination clauses. A well-drafted agreement ensures clarity and prevents disputes between the licensor and licensee. Below, you can directly view and download the leave and license agreement in Hindi, Marathi, Gujarati, and English.
Download leave and license agreement
| Leave and licence agreement (Hindi) PDF | Download |
| Leave and licence agreement (Marathi) PDF | Download |
| Leave and licence agreement (English) | Download |
| Leave and licence agreement Word Doc | Download |
| Leave and licence agreement 11 months PDF | Download |
Leave License Agreement format – English
This agreement is made and executed on (Date) at (City) Between, (Name) , Age: About Years, Occupation: , PAN: , UID: . Residing at: HEREINAFTER called ‘the Licensor (which expression shall mean and include the Licensor above named as also his respective heirs, successors, assigns, executors and administrators)
AND (Name) , Age: About Years, Occupation: ___ , PAN:_________, UID:________ . Residing at ___________________________________________________________________ HEREINAFTER called ‘the Licensee’ (which expression shall mean and include only Licensee above named).
WHEREAS the Licensor is absolutely seized and possessed of and or otherwise well and sufficiently entitled to all that constructed portion being unit described in Schedule hereunder written and are hereafter for the sake of brevity called or referred to as Licensed Premises and is/are desirous of giving the said premises on Leave and License basis under Section 24 of the Maharashtra Rent Control Act, 1999.
AND WHEREAS the Licensee herein is in need of temporary premises for his use has/have approached the Licensor with a request to allow the Licensee herein to use and occupy the said premises on Leave and License basis for a period of Months commencing from and ending on , on terms and subject to conditions hereafter appearing.
AND WHEREAS the Licensor have agreed to allow the Licensee herein to use and occupy the said Licensed premises for his aforesaid purposes only, on Leave and License basis for above mentioned period, on terms and subject to conditions hereafter appearing;
NOW THEREFORE IT IS HEREBY AGREED TO, DECLARED AND RECORDED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
1) Period: That the Licensor hereby grants to the Licensee herein a revocable leave and license, to occupy the Licensed Premises, described in Schedule hereunder written without creating any tenancy rights or any other rights, title and interest in favour of the Licensee for a period of Months commencing from and ending on
2) Rent & Deposit: That the Licensee shall pay to the Licensor Rs. Per month towards the compensation and Rs. Interest free refundable deposit, for the use of the said licensed premises. The amount of monthly compensation shall be payable within first five days of the concerned month of Leave and License.
Or
That the Licensees shall pay to the Licensor the following amount per month towards the compensation for the use of the said licensed premises . a) Rs —————-per month for the first ——–months, b) Rs—————–per month for the next ——–months, c) Rs—————–per month for the next ——–months The amount of monthly compensation shall be payable within first five days of the concerned month of Leave and License. OR · That the Licensees shall pay to the Licensor Rs————–per month towards the compensation and Rs————–interest free refundable deposit, for the use of the said licensed premises. The amount of monthly compensation shall be payable within first five days of the concerned month of Leave and License.
OR
That the Licensees shall pay to the Licensor Rs————–per month towards the compensation and Rs————–interest free nonrefundable deposit, for the use of the said licensed premises. The amount of monthly compensation shall be payable within first five days of the concerned month of Leave and License.
OR
That the Licensees shall pay to the Licensor the following amount per month towards the compensation for the use of the said licensed premises . a) Rs —————-per month for the first ——–months, b) Rs—————–per month for the next ——–months, c) Rs—————–per month for the next ——–months. The amount of monthly compensation shall be payable within first five days of the concerned month of Leave and License. Licensees shall also pay to the Licensor Rs————–interest free refundable deposit, for the use of the said licensed premises.
OR
That the Licensees shall pay to the Licensor the following amount per month towards the compensation for the use of the said licensed premises. a) Rs —————-per month for the first ——–months, b) Rs—————–per month for the next ——–months, c) Rs—————–per month for the next ——–months. The amount of monthly compensation shall be payable within first five days of the concerned month of Leave and License. Licensees shall also pay to the Licensor Rs————–interest free nonrefundable deposit, for the use of the said licensed premises.
3) Payment of Deposit:
That the Licensee have paid / shall pay the above mentioned deposit/premium as mentioned above by Cash. Amount Rs.________
OR
That the ———————- has/have paid / shall pay the above mentioned deposit/premium as mentioned above by Demand Draft No.———-, dated ——–, drawn from —————- Bank, ————- Branch. Amount Rs.————-
OR
That the ———————- has/have paid / shall pay the above mentioned deposit/premium as mentioned above by Cheque No. ———–, dated——–, drawn on the Licensee’s Banking Account with —————- Bank, ————- Branch. Amount Rs.————-
OR
That the ———————- has/have paid / shall pay the above mentioned deposit/premium as mentioned above by Transaction Reference No. ————-, dated———-, drawn on the Licensee’s Banking Account with ————— Bank, ———– Branch. Amount Rs.———–
4) Maintenance Charges:
That the all outgoings including all rates, taxes, levies, assessment, maintenance charges, non occupancy charges, etc. in respect of the said premises shall be paid by the Licensor.
OR
That the Licensee/s herein shall bear and pay all the maintenance charges in respect of the said Licensed Premises, and other outgoings including all rates, taxes, levies, assessment, non occupancy charges, etc. in respect of the said premises shall be paid by the Licensor/s
5) Use: That the Licensed premises shall only be used by the Licensee for purpose. The Licensee shall maintain the said premises in its existing condition and damage, if any, caused to the said premises, the same shall be repaired by the Licensee at its own cost subject to normal wear and tear. The Licensee shall not do anything in the said premises which is or is likely to cause a nuisance to the other occupants of the said building or to the prejudice in any manner to The rights of Licensor in respect of said premises or shall not do any unlawful activities prohibited By State or Central Government.
6) Alteration: That the Licensee shall not make or permit to do any alteration or addition to the construction or arrangements (internal or external) to the Licensed premises without previous consent in writing from the Licensor.
7) No Tenancy: That the Licensee shall not claim any tenancy right and shall not have any right to transfer, assign, and sublet or grant any license or sub-license in respect of the Licensed Premises or any part thereof and also shall not mortgage or raise any loan against the said premises.
8) Inspection: That, the Licensor shall on reasonable notice given by the Licensor to the Licensee shall have a right of access either by himself or through authorized representative to enter, view and inspect the Licensed premises at reasonable intervals.
9) Cancellation: That, if the Licensee commits default in regular and punctual payments of monthly compensation as herein before mentioned or commit/s breach of any of the terms, covenants and conditions of this agreement or if any legislation prohibiting the Leave and License is imposed, the Licensor shall be entitled to revoke and / or cancel the License hereby granted, by giving notice in writing of one month and the Licensee too will have the right to vacate the said premises by giving a notice in writing of one month to the Licensor as mentioned earlier.
10) Possession: That the immediately at on the expiration or termination or cancellation of this agreement the Licensee shall vacate the said premises without delay with all his goods and belongings. In the event of the Licensee failing and / or neglecting to remove himself and / or his articles from the said premises on expiry or sooner determination of this Agreement, the Licensor shall be entitled to recover damages at the rate of double the daily amount of compensation per day and or alternatively the Licensor shall be entitled to remove the Licensee and his belongings from the Licensed premises, without recourse to the Court of Law.
11) Registration: This Agreement is to be registered and the expenditure of Stamp duty and registration fees and incidental charges, if any, shall be borne by the Licensee.
Schedule:
(Description of flat which is the subject matter of these presents) All that constructed portion being residential unit bearing___( Apartment/Flat No.) ____, Built-up (Area): ___________, situated on the Floor of a Building known as ______________ standing on the plot of land bearing ___________________________________________________ , of Village: , situated within the revenue limits of Tehsil and Dist and situated within the limits of Municipal Corporation.
IN WITNESS WHEREOF the parties hereto have set and subscribed their respective signatures by way of putting thumb impression electronic signature hereto in the presence of witness, who are identifying the executants, on the day, month and year first above written.
Licensee
Name
Address
Photo
Thumb impression
Licensor
Name
Address
Photo
Thumb impression
Witness of execution -cum- identifier for
Name
Address
Photo
Thumb impression
Witness of execution -cum- identifier for
Name
Address
Photo
Thumb impression
Leave and license agreement format 2
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.
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
Download leave and license agreement word format
Click here to download leave and license agreement format in Hindi PDF
Difference between leave and license agreement and lease agreement
In property law, particularly within the Indian context, lease agreements and leave license agreement are two distinct legal instruments governing the use of immovable property. Understanding their differences is crucial for both property owners and occupants.
Leave and license agreement vs lease agreement
| Aspect | Lease Agreement | Leave and License Agreement |
| Legal Definition | Defined under Section 105 of the Transfer of Property Act, 1882; transfers the right to enjoy the property. | Defined under Section 52 of the Indian Easements Act, 1882; grants permission to use the property. |
| Possession | Grants exclusive possession—the tenant controls the property to the exclusion of others, including the landlord. | Provides non-exclusive possession—the licensor retains overall control of the property. |
| Transfer of Interest | Transfers an interest in the property; the tenant’s rights are transferable and can be inherited. | Does not transfer any interest; the permission is personal, non-transferable, and non-heritable. |
| Duration | Usually long-term with a fixed period (or even perpetual), ensuring stable occupancy. | Typically short-term (often around 11 months) to avoid rent control laws. |
| Termination | Difficult to terminate before expiry without breach or penalties. | Can be revoked more easily by the licensor, offering less long-term security. |
| Stamp Duty & Registration | Requires higher stamp duty and mandatory registration for terms exceeding one year. | Generally involves lower stamp duty; registration is optional but recommended. |
| Applicability of Rent Control Laws | Subject to rent control laws, which offer additional protections to tenants. | Generally not covered by rent control laws, providing fewer statutory tenant protections. |
How rent control laws affect rent vs leave and license agreements
Rent control laws were introduced in several Indian states to protect tenants from arbitrary eviction and unfair rent hikes. However, the application of these laws depends heavily on the type of agreement and the local jurisdiction.
Do rent control laws apply to both agreements?
- Rent/lease agreements: These are often governed by the respective State Rent Control Acts (e.g., Maharashtra Rent Control Act, Delhi Rent Control Act), especially when the agreement exceeds 12 months or is not registered as a leave and license.
- Leave and license agreements: Generally exempt from rent control laws because they are seen as a temporary permission to occupy, not a transfer of tenancy rights or interest in the property.
However, courts will scrutinize the substance of the agreement—not just the title. If a so-called “leave and license” agreement behaves like a lease (e.g., long-term, exclusive possession, fixed rent, no termination flexibility), it may still attract rent control protections.
State-wise application of rent control laws
| State | Rent Control Act in Force? | Applies to Leave & License? |
| Maharashtra | Maharashtra Rent Control Act, 1999 | No, unless disguised lease or unregistered |
| Delhi | Delhi Rent Control Act, 1958 | No, unless tenant proves long-term possession |
| Tamil Nadu | Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act, 2017 | Applies only to lease/rent agreements |
| Karnataka | Karnataka Rent Act, 1999 | Not applicable to leave and license |
| West Bengal | West Bengal Premises Tenancy Act, 1997 | Applies to leases; license agreements exempt |
Note: Agreements over 12 months must be registered in most states to be valid, failing which tenants may claim protection under Rent Acts regardless of agreement type.
Why it matters for landlords
Choosing a leave and license agreement gives landlords more flexibility and protects them from long-drawn eviction battles and rent freeze rules under rent control acts. A registered rent/lease agreement, on the other hand, gives tenants significant legal rights and protections.
This is why in high-demand cities like Mumbai and Pune, landlords prefer registered leave and license agreements—to avoid rent control litigation, retain control, and ensure quicker repossession if needed.
What is the maximum time for which a standard leave and license agreement can be done?
In India, a standard leave license agreement typically spans 11 months, a duration commonly adopted for both residential and commercial properties. This 11-month term is often preferred to avoid the complexities associated with the registration process, as agreements exceeding 12 months require mandatory registration under the Registration Act, 1908. Additionally, longer agreements may invoke rent control laws, which can impose restrictions on rent increases and eviction procedures.
However, the duration of a leave license agreement is not fixed and can be mutually agreed upon by the licensor and licensee based on their specific needs and preferences. While 11 months is common, agreements can extend beyond this period, with some lasting up to 60 months (5 years). It’s important to note that agreements exceeding 12 months in duration must be registered to be legally enforceable.
When opting for a longer-term agreement, both parties should be aware of the implications, including compliance with rent control laws and the necessity for registration. Consulting with legal professionals can provide clarity on the best course of action tailored to the specific circumstances of the property and the parties involved.
Why is the leave and license agreement for 11 months?
In India, leave and license agreements are typically made for 11 months to avoid the mandatory registration and associated stamp duty applicable to agreements of 12 months or more under the Registration Act, 1908. By keeping the term under a year, parties can execute the agreement on non-judicial stamp paper with notarisation instead of full registration, which saves both time and cost.
Additionally, this shorter term gives landlords flexibility to revise rent, change terms, or end the arrangement without going through a formal termination process. For tenants, it offers easier exit if circumstances change. In states like Maharashtra, however, even 11-month leave and license agreements must be registered under state-specific rules, so local laws must be checked.
From a taxation perspective, the agreement period does not change the tax treatment of rental income, but it does affect the legal enforceability of terms if disputes arise — unregistered long-term agreements may not hold up in court.
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Common clauses in leave license agreements
Here are some common clauses typically found in such agreements:
- Parties involved: Clearly identifies the licensor and licensee, including their full names, addresses, and identification details.
- Description of the premises: Provides a detailed description of the property, including its address, type (e.g., residential, commercial), and any specific areas included (e.g., parking spaces).
- Duration of the agreement: Specifies the start and end dates of the agreement, outlining the term of occupancy.
- License fee (Rent): Details the amount of rent to be paid, the payment frequency (e.g., monthly), due dates, and acceptable payment methods.
- Security deposit: Indicates the amount of the security deposit, the conditions under which it may be withheld, and the timeline for its return after the agreement ends.
- Purpose of use: Defines the permitted use of the property (e.g., residential, office space) and prohibits unauthorized activities.
- Maintenance responsibilities: Outlines the responsibilities of both parties regarding property maintenance, including repairs, cleanliness, and upkeep.
- Alterations and improvements: Specifies whether the licensee can make any alterations or improvements to the property and the conditions for obtaining prior consent from the licensor.
- Termination clause: Details the conditions under which either party can terminate the agreement, including notice periods and procedures.
- Renewal terms: Describes the process for renewing or extending the agreement, including any changes in terms or conditions.
- Indemnity clause: States that the licensee will indemnify the licensor against any claims, damages, or losses arising from the licensee’s use of the property.
- Dispute resolution: Outlines the mechanism for resolving disputes, such as mediation, arbitration, or legal proceedings, and specifies the jurisdiction.
- Force majeure: Addresses unforeseen events (e.g., natural disasters, pandemics) that may affect the performance of the agreement.
- Governing law: Specifies the legal jurisdiction and laws that will govern the agreement.
See also: Differences between leases and rental agreements
Benefits of a leave and license agreement
A lease and license agreement, often called a “leave license agreement,” offers several advantages, primarily favouring the property owner while providing a clear legal structure for the tenant. Here’s a breakdown of its key benefits:
- Easier eviction: One of the most significant benefits for landlords is the ability to have the tenant vacate the property without prolonged legal battles. The leave license agreement simplifies the eviction process as it grants permission to occupy the property rather than long-term rights.
- No property rights for tenants: Unlike a traditional lease, this agreement does not create any property rights in favor of the tenant. The occupant cannot claim ownership or any legal rights to the property beyond the agreed-upon terms.
- No transfer of interest: Since no interest in the property is transferred to the tenant, the owner retains full control over their asset. This ensures that the tenant cannot stake any claim to the property beyond the agreement’s duration.
- Exemption from rent control acts: Since leave license agreements fall under the Indian Contract Act and not under the Rent Control Acts; landlords are not subject to the restrictions imposed by rent control laws, which often favor tenants.
Taxation of income under leave and licence vs rent agreement
From a taxation perspective, the income earned by a landlord—whether through a rent agreement or a leave and licence agreement—is treated in the same way under the Income Tax Act, 1961. It is taxed under the head “Income from House Property.” The calculation is based on the gross rent/licence fee received, after allowing permissible deductions.
Key tax aspects to note:
- Standard Deduction: A flat 30% deduction under Section 24(a) is allowed from the net annual value, regardless of actual expenses.
- Home Loan Interest Deduction: If the property is financed with a loan, interest paid can be claimed under Section 24(b), up to ₹2 lakh per year for self-occupied property (no limit if let out).
- Municipal Taxes: Property tax actually paid during the year can be deducted from the rental/licence income before computing taxable value.
TDS applicability:
- Under Section 194-IB, if the monthly rent or licence fee exceeds ₹50,000, the tenant/licensee must deduct TDS at 5% of the total rent/fee paid in a financial year. This applies equally to both rent agreements and leave and licence agreements.
- The tenant is not required to obtain a TAN; deduction can be deposited using Form 26QC and reflected in Form 16C issued to the landlord.
Advance rent or security deposits:
- Refundable security deposits are not taxable at the time of receipt.
- Non-refundable deposits or advance rent are treated as part of taxable income in the year of receipt.
In short, while the legal implications of rent agreements and leave and licence agreements differ, taxation of the income is largely identical, with both attracting TDS obligations and falling under “Income from House Property.”
Leave and license agreement stamp duty: State-specific rules variations
Leave and licence agreements in India are subject to state-specific regulations, particularly stamp duty rates and registration requirements. Each state determines its stamp duty rates for these agreements, leading to variations across the country.
Leave and license agreement in Maharashtra
In Maharashtra, including cities like Mumbai and Pune, the stamp duty for leave and licence agreements is 0.25% of the total rent and deposit for the duration of the agreement. Additionally, registration of such agreements is mandatory under Section 55 of the Maharashtra Rent Control Act, 1999.
Leave and license agreement in Delhi
Delhi’s stamp duty rate for leave and licence agreements is typically 2% of the average annual rent. Registration of these agreements is not mandatory but is advisable to ensure legal enforceability.
Leave and license agreement in Karnataka
Karnataka imposes a stamp duty of 1% on the total rent plus deposit for the lease period, subject to a minimum of Rs 500. Registration is mandatory for agreements exceeding 11 months.
Leave and license agreement in Tamil Nadu
In Tamil Nadu, the stamp duty is 1% of the total rent and deposit, with a minimum of Rs 20,000. Registration is compulsory for agreements over 11 months.
Leave and license agreement in West Bengal
West Bengal charges a stamp duty of 2% of the average annual rent for agreements up to three years. Registration is mandatory for agreements exceeding one year.
These variations underscore the importance of understanding state-specific regulations when drafting leave and licence agreements. Consulting local legal experts or official state resources is recommended to ensure compliance with regional laws.
Leave and license agreement in Kerala
In Kerala, a Leave and License Agreement is typically established for a duration of up to 11 months. The stamp duty for such agreements is calculated at 0.25% of the total rent for the period, including any advance rent and deposits. Registration fees vary based on the property’s location: Rs 500 for rural areas and Rs 1,000 for properties within municipal corporation limits.
How to calculate stamp duty for a leave and license agreement?
When registering a Leave and License Agreement, stamp duty and registration fees must be paid to the Registrar of Assurances, which is governed by state-specific laws. Here’s the general formula to calculate stamp duty for agreements with a term of up to 60 months (including a renewal clause):
Monthly License Fee × Number of Months = [A]
10% of Refundable Deposit × Number of Years in Agreement = [B]
Non-Refundable Deposit / Advance License Fee = [C]
Total Economic Value (D) = [A] + [B] + [C]
Stamp Duty (E) = 0.25% of [D]
For agreements exceeding 60 months, the stamp duty valuation differs significantly based on applicable laws and the adjudicated property value. A higher license fee and deposit increase the stamp duty payable.
Housing.com POV
The Leave and Licence Agreement is an essential legal document that balances the interests of property owners and occupants in India. Through the ease of online registration, it has become an indispensable tool for securing property transactions. With clarity on its legal definition, format, and online process, you’re well-equipped to navigate the country’s dynamic landscape of property management in the country.
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.
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.
What is the minimum period of leave and license agreement?
The minimum period of leave and license agreement is an 11-month period.
What is the maximum tenure of a leave and license agreement?
The maximum tenure of a leave and licence agreement could be 60 months.
Is a leave and license agreement transferable?
No, a leave and license transferable is not transferable.
What is the biggest benefit of a leave and license agreement?
Flexibility is the biggest benefits of a leave and license agreement. It works best for short-term leasing arrangements.
Leave and licence agreement is dealt by which law
In India, leave and licence agreements are governed by the Indian Easements Act, 1882, which defines a licence as a right granted by one person to another to do something on the grantor’s immovable property that would otherwise be unlawful. Additionally, these agreements are subject to the provisions of the Indian Contract Act, 1872, as they constitute a contractual arrangement between the licensor and licensee.
What happens if I do not register a leave and license agreement?
Not registering a leave and licence agreement might appear convenient, but it leaves landlords exposed to disputes, delays, and financial penalties. Registration ensures the agreement has full legal weight, prevents misuse by occupants, and safeguards ownership rights.
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