Leave and License vs. Rent Agreements: Key Differences And Benefits
What is the difference Between Leave and License vs Rent Agreement?
When renting a house, you might hear "Leave and Licence Agreement" and "Rent Agreement." Even though they sound similar, they are quite different. Understanding these differences can help you decide which is right for you, whether renting a property or renting it out.
What is a Rent Agreement?
A rent agreement is made when you give someone possession of your property in exchange for a monthly payment. It is generally made for 11 months or for some years too and can be registered. It provides the tenant with the rights over the property for that specific period of time.
If you need to evict the tenant before the agreement expires under the Rent Control Act, you must go through legal procedures. During that period, the tenant can continue to use the property.
What is Leave and Licence Agreement?
On the other hand, the notable difference between leave and license agreement vs rent agreement is here monthly payment is not mandatory. Maximum period of leave and license agreement can go upto 5 years but generally it is made for 11 months to avoid legal hardships. Under this agreemnet the owner just give you right to use the property for specific purpose for a certain period.
Under this agreement montly rental is not mandatory and you can get property just for general use. The owner can evict you anytime as the owner have no legal bindings under this agreement. You can understand it more easily with below table.
Leave and License agreement vs Rent agreement
Difference Between leave and license vs lease agreement
A Leave and License Agreement is governed by the Indian Easements Act, 1882. It allows the owner (licensor) to give permission to the occupant (licensee) to use the property without transferring possession. The owner retains control, and it’s easier to terminate. It’s often used for short-term arrangements.
A Lease Agreement, governed by the Transfer of Property Act, 1882, gives the tenant (lessee) exclusive possession of the property for a fixed duration. Eviction is harder and requires legal procedures, often covered by Rent Control Acts.
Case Reference: K.K. Verma v. Union of India (1984), where the court distinguished between licensee (Leave and License) and tenant (Lease).
Why Leave and Licence Agreements Can Be Better for Homeowners?
One of the biggest concerns for homeowners is dealing with tenants who refuse to leave. If a tenant stays in the property longer than agreed and refuses to vacate, it can lead to a long and complicated legal process.
With a Leave and Licence Agreement, ending the agreement and getting the property back is generally easier since it doesn’t fall under the Rent Control Act, providing owners more rights.
In a Leave and License Agreement, the tenant does not gain any property rights and must leave the property when the agreement ends. This makes it a safer option for property owners who want to avoid lengthy legal battles.
To make things even more secure, homeowners often use 11-month Leave and License Agreements and renew them as needed. This helps ensure that the property remains in the owner’s control and avoids issues related to long-term tenancy rights.
Final Words
Understanding the difference between Leave and License Agreements and Rent Agreements is crucial for anyone renting a property in India. Leave and License Agreements offer more flexibility for landlords, making it easier to regain property control.
On the other hand, Rent Agreements might provide tenants with more protection and stability, especially under the Rent Control Act. The maximum period of a Leave and License Agreement generally simplifies the process of renewing or ending the agreement, providing a clear and manageable timeframe for property use.
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