When it comes to renting a property in India, there are two types of agreements that are commonly used – a Lease Agreement and a Leave and License Agreement. Both agreements may sound similar, but there are crucial differences between the two that every tenant and landlord must understand before signing any document.
A Lease Agreement is a legal contract between a landlord and tenant in which the tenant is given the right to occupy the property for a specified period. The agreement is signed for a minimum duration of 12 months and can be extended up to 99 years. During this period, the tenant has the right to use the property as his own, subject to the terms and conditions mentioned in the agreement. A lease agreement is ideal for long-term tenancies and provides tenants with stability and security.
On the other hand, a Leave and License Agreement is a permission given by the owner of the property to provide the licensee with temporary occupation of the property in exchange for rent. The agreement is signed for a maximum of 11 months and can be renewed after the completion of this period. This agreement is ideal for short-term tenancies and provides flexibility to both the tenant and landlord.
The key difference between the two agreements is ownership. In a Lease Agreement, the tenant is given an interest in the property, which means the tenant has the right to occupy and use it as if he was the owner of the property. Whereas in a Leave and License Agreement, the licensee is only given permission to use the property and does not have any ownership interest in it.
Another critical difference between the two agreements is the legal status. The Lease Agreement falls under the Transfer of Property Act, whereas the Leave and License Agreement falls under the Indian Easements Act. Therefore, the rights and responsibilities of both parties in each agreement may vary.
When it comes to termination, a Lease Agreement can be terminated only after the expiry of the agreed term. On the other hand, a Leave and License Agreement can be terminated at any time by either party by giving notice as per the agreement.
In conclusion, when renting a property, it is essential to understand the differences between a Lease Agreement and a Leave and License Agreement. Both agreements have their unique features, and the choice should be made based on the tenant`s needs and requirements. It is always advisable to seek legal guidance before signing any agreement to avoid any disputes in the future.