From the legal websites, it seems that leave and license agreements are totally in favor of the licensor or landlord and have no disadvantages at all vis-a-vis a lease agreement. The eleven month agreement also implies that one can avoid paying stamp duty. On the face of it, this seems too good to be true. Can we know the overall pros and cons of both the lease and license vis-a-vis the lease agreement to enable us to take a decision in the matter.-from the landlord's point of view.
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lease grants a tenant with exclusive possession, while a leave and license agreement only grants permission to occupy the property
2) lease are transferable while leave and license are not
3) stamp duty is lower in case of leave and licence agreement
I must clarify that if it is an 11 month leave and license agreement, there is no stamp duty as per my understanding.and I want to know if there is a catch anywhere from the landlord or licensor's point of view
- A lease agreement is an agreement between two or more parties in which one party leases property to the other party for a set period of time.
- Whereas , a leave and licence agreement is a legal document that enables one party to allow another party to use their immovable property.
- The better option is a leave and license agreement , as the landlords property can't be taken over by the tenant in any case.
- Yes, no registration and stamp duty is required for 11 months leave and license agreement.
It is general misconception and also wrong notion that in case of lease or license agreement for 11 months the stamp duty is not payable. As per stamp Act every document including lease or license agreement fetch prescribed stamp duty which required to be affixed on document and to give legal entity every document is to be registered. The only difference between lease and license is that in case of license a person is granted license and permitted to use the premises in lieu of monthly license fee and the premises remain with licensor while in case of lease possession is also handed over to the tenant in lieu to monthly rent or lease money. If a document is not properly stamped and registered then such document though can be looked into for corroborating purpose only. In case of dispute court can sent such under stamped or unstained document to registrar of stamp who can impose 10 times penalty beside applicable stamp duty.
So in the light of above your understanding is incorrect and misconstrued about law of land and there is ever catch everywhere in such cases as elaborated by you.
The leave and license agreements should be stamped with a stamp duty charge of 0.25% of the total rent for the period.
stamp duty is payable in Maharashtra even if agreement is for 11 months and must be registered
Primary distinctions between Lease and Licence:
1. A lease is a transfer of an interest in a specific immovable property, while licence is a bare permission, without any transfer of an interest.
2. A lease creates an interest in favour of the leassee with respect of the property, but a licence does not create such an interest.
3. A lease is both transferable and heritable, a sub tenancy can be created by the tenant and on the death of the tenant, the tenancy can be inherited by his/her legal heir, whereas, licence is neither transferable nor heritable.
4. A licence comes to an end with the death of either the grantor or the grantee, since it is a personal contract, but a lease does not comes to an end on either the death of the grantor or grantee.
5. A licence can be withdrawn at any time at the pleasure of the grantor but the lease can come to an end only in accordance with the terms and condition stipulated in the contract of tenancy agreement.
6. A lease is unaffected by the transfer of the property by sale in favour of a third party. It continues and the purchaser has to wait till the time period for which the tenancy was created is over before he can get the possession, whereas, in case of a licence, if the property is sold to a third party, it comes to n end immediately.
In the case of Municipal Corporation of Delhi vs. Pradip Oil Corporation and Anr. the Delhi High Court, made an important observation that a mere license does not create interest in the property to which it relates. Lease on the other hand, would amount to transfer of property. License may be personal or contractual.
In the National Capital Territory (NCT) of Delhi, it is mandatory to register the leave and license agreement for the rental period of more than 11 months. Registering a rent agreement is optional in case the rental period is less than or equal to 11 months.
In the National Capital Territory (NCT) of Delhi, it is mandatory to register the leave and license agreement for the rental period of more than 11 months. Registering a rent agreement is optional in case the rental period is less than or equal to 11 months.
The stamp duty of rental agreement in Delhi is 2 per cent of consideration charges for 1-5year of tenure and 5 per cent in case of 5-10 of tenure period.
You need to pay stamp duty and also register the leave and license agreement.
Lease Agreement: A lease agreement typically grants exclusive possession and control of the property to the tenant for a specified duration. Here are some pros and cons to consider:
Pros:
Stability: A lease provides stability as it is usually for a longer duration, such as 1 year or more, and ensures consistent rental income.Rent Increase Control: The lease agreement can include clauses that limit the frequency and amount of rent increases during the lease term.Legal Protections: A lease agreement provides legal protections to both parties, outlining their rights and responsibilities.
Cons:
Limited Flexibility: A lease agreement restricts the landlord's ability to terminate the tenancy before the specified duration, which may be a disadvantage if the landlord wants to use or sell the property.Longer Vacancy Periods: If a tenant chooses not to renew the lease, there may be a longer period of vacancy between tenants.
Leave and License Agreement: A leave and license agreement grants permission or a license to occupy the property for a specific period. Here are some pros and cons to consider:
Pros:
Flexibility: A leave and license agreement provides more flexibility to the landlord as it allows for the termination of the agreement after the license period expires.Quick Possession: Since the agreement is typically for a shorter duration, the landlord can regain possession of the property relatively quickly if needed.
Cons:
Uncertainty: A leave and license agreement gives the licensee the right to occupy the property, which means the licensee may have certain rights that can make eviction more challenging compared to a lease agreement.Frequent Renewals: If the licensee wants to continue occupying the property, the agreement may require frequent renewals, resulting in more administrative work and potential negotiation of terms.
Regarding the issue of stamp duty, please note that stamp duty laws and regulations can vary by jurisdiction. It's essential to consult with a local lawyer to understand the specific stamp duty requirements and exemptions in your area.
