• Lease deed or Leave and License Agreement

1. What is difference between "Lease Agreement" & "Leave And License Agreement"?

2. I have a property which I want to give for Leave And License. One MNC company is interested but their Legal Department wants me to do Lease Deed instead of Leave & License. Its for duration of 5 years only and may be extended for further 5 years after expiration of first 5 years. What is best suited for me? What risk I have in this case?

3. How best I can convince them to sign a "Leave And License Agreement" instead of "Lease Deed"? In my view, idea of signing Lease Deed is risky. What if they do not vacant the place after Lease Deed period is over? 

I do not want to lose this opportunity, but at the same want to safe guard my interests. Please suggest best alternative.
Asked 1 year ago in Property Law from Pune, Maharashtra
Religion: Hindu
Hello,

1)A Lease, defined under Section 105 of The Transfer of Property Act, 1882, is a transfer of the right to enjoy the concerned property for a pre-defined time period or in perpetuity. The lessor (owner of the property) gives the lessee (the one leasing the property) such consideration periodically, usually at the beginning or end of a lease agreement.

2) License is defined in Section 52 of the Indian Easements Act,1882. License does not allow any interest in the premises on the licensee's part. It merely gives the licensee the right to use and occupy the premises for a limited duration.

3) A lease deed needs to be stamped and registered. The amount payable towards the lease deed's stamp duty is more than that payable towards the Leave and License's. For a period exceeding three years, the stamp duty is same for both agreements.

4) Usually when the premise has to be given for use for a longer duration lease would be the usual practice. In either case if the lessee or the tenant refuses to vacate there are stipulations in the agreement that you enter into to evict.

5) Therefore you may either enter into a leave and license Agreement or Lease Agreement. You need to make sure that the draft is duly vetted by a good lawyer and your interests are protected. 
S J Mathew
Advocate, Mumbai
1950 Answers
65 Consultations
5.0 on 5.0
1. What is difference between "Lease Agreement" & "Leave And License Agreement"?
Under license agreements, the legal ownership and the possession of the property remain with the licensor.  Under a lease agreement, the tenant generally has exclusive possession with respect to the property. In other words, a license does not create any interest in the premises in favor of the licensee.
A license agreement is easier to terminate than a rent agreement. License agreements are terminable, whereas lease agreements are generally not.
The amount payable towards stamp duty is more for a lease agreement as compared to a leave and license agreement. But for duration of more than three years, the stamp duty payable is the same for both.




2. I have a property which I want to give for Leave And License. One MNC company is interested but their Legal Department wants me to do Lease Deed instead of Leave & License. Its for duration of 5 years only and may be extended for further 5 years after expiration of first 5 years. What is best suited for me? What risk I have in this case?
It is a general practice by such MNCs to enter into a lease agreement instead of leave and licence agreement because they will then have an interest in the property. In other words, they will have more control over the property.  The lease agreement for the period may be decided mutually, it is not very important that you should abide by the conditions they would try to impose, you can make alterations suiting to your taste too. 



3. How best I can convince them to sign a "Leave And License Agreement" instead of "Lease Deed"? In my view, idea of signing Lease Deed is risky. What if they do not vacant the place after Lease Deed period is over? 
There is no reason for them to refuse to vacate the leased property after expiration of lease period.  You can file an eviction suit, in fact in a leave and licence agreement too if they refuse to vacate, you may have to follow the due process of law for vacating them and cannot throw them out as per your will and wish.
So there is no much difference between them, choice is yours. 

T Kalaiselvan
Advocate, Vellore
14008 Answers
127 Consultations
5.0 on 5.0
1) with MNC  you are safe 

2) you can enter into lease deed with MNC for period of 5 years with a renewal clause . Get agreement vetted by your lawyer have it suk stamped and registered 

3) if you don't want to give your premise for period of 5 years enter Into 
 leave and licence agreement for period of 11 months or more with renewal clause 

4) iLease, defined under Section 105 of The Transfer of Property Act, 1882, is a transfer of the right to enjoy the concerned property for a pre-defined time period or in perpetuity. The lessor (owner of the property) gives the lessee (the one leasing the property) such consideration periodically, usually at the beginning or end of a lease agreement. License is defined in Section 52 of the Indian Easements Act,1882. License does not allow any interest in the premises on the licensee's part. It merely gives the licensee the right to use and occupy the premises for a limited duratipm 
Ajay Sethi
Advocate, Mumbai
23235 Answers
1219 Consultations
5.0 on 5.0
A license is a personal right granted to a person to do something upon immovable property of the grantor and does not amount to the creation of interest in the property itself. It is purely a permissive right and is personal to the grantee. It creates no duties and obligations upon the persons making the grant and is, therefore, revocable except in certain circumstances expressly provided for in the Act itself. The license, when granted, has not other effect to confer liberty upon the licensee to go upon the land which would otherwise be lawful.

Section 52 of Indian Easement Act, 1882 defines License as under:

“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 immovable property of the grantor, something which would, in the absence of such rights, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.”

Decisions of the Supreme Court in Associated Hotels of India Ltd. vs. R.N. Kapoor [AIR 1959 SC 1262] summed the concept of License as under:

“… Under the aforesaid section, if a document gives only a right to use the property in particular way or under certain terms while it remains in the possession and control of the owner thereof, it will be a license. The legal possession, thereof, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property.”

It important to take note of essential features of license as under:

1.	A license is not connected with the ownership of land / property but creates only a personal right or obligation;

2.	A license cannot be transferred or assigned;

3.	License is purely permissive right arising only by permission, express or implied, and not by adverse exercise or in any other way;

4.	It only legalize a certain act which would otherwise be unlawful and does not confer any interest in the property itself in or upon or over which such act is allowed to be done;
Pradeep Bharathipura
Advocate, Bangalore
4105 Answers
133 Consultations
4.3 on 5.0
1. If the refusal to vacate the premises after the expiry of the lease is the only concern then be informed that in leave and license also the tenants do not vacate after the expiry of the agreement. Filing a case for eviction in the court is the only available recourse in both scenarios.

2. In the end the mutual rights and liabilities which can be asserted by the parties boils down to the contours of the agreement. So get a flawless agreement drafted from your lawyer instead of signing on the dotted line of the one prepared by the company.
Ashish Davessar
Advocate, Jaipur
18102 Answers
448 Consultations
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