What is Leave and License Agreement

A leave and license agreement is an agreement wherein the licensor temporarily allows the
licensee to use and occupy licensor's immovable property full or a portion of it, for the
purpose of carrying business activity or residential use. For this, the licensor shall be paid
by the licensee a fixed amount also known as the rent. The leave and license are usually
granted to the licensee for a period of 11 months. The agreement must be registered before
the sub-registrar at the place of jurisdiction (the place where the immovable property is
located).

Section 52 in the Indian Easement Act, 1882 defines “License” as:

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

In Leave and license the owner gives mere permission to the licensee (the holder of a license)
without the transfer of interest of property by the owner. If in case the property is sold to any
third person, the agreement comes to an end immediately. If licensee tends to occupy the
property longer than the time mutually accepted (generally 5 years) by the parties, they are
believed to be unlawful occupants of the property. It ensures that there is no transfer of interest
from the licensor (he person who grants a license to another) to the licensee (the holder of a
license). The License is to occupy and use the premises in the mentioned duration on mutually
agreed terms of the agreement.

Characteristics Of A Leave And Licence Agreement

A popular choice among landlords, the Leave and Licence agreement has the following
properties.

 No transfer of interest is created from owner to tenant

 No property rights is created
 The amount due as Licence fee, deposit and other charges can be contractually
determined by participating individuals
 Typical duration of contract is eleven (11) months
 Owner maintains higher freedom and rights when it comes to cancellation and eviction of
tenant
Most of the leave and license agreement have the following under mentioned clauses in the
leave and license agreement.

1. Possession: In most of the agreements it is suggested that possession of the property during
the entire term of the agreement shall remain with Licensor. However, the agreement should
clearly specify that there is no intention of the licensor to transfer any right or interest in the
property per se and the right been granted is an Exclusive Right.

2. Lock in period: Both licensor and licensee shall be locked in for a certain term of license
agreement (for some Years or so). The license is always terminable at will of the party. By
granting a license, Licensor is merely granting a permissive or exclusive right to licensee and not
the property itself.

3. Possession is Exclusive: The agreement should clearly state that licensor is granting, and
licensee is entitled to exclusive license for the property. It must be clear that there is distinction
between exclusive license and exclusive possession.

4. Notice: The Licensor should give notice to licensee while revoking the license. The Law does
not bar any of the parties to agree to a certain form of notice to be given by licensor to licensee
before any kind of revocation of license by the licensee. If such terms are agreed, it would be an
obligation on the part of licensor to do so.

5. Keys and Locks with the Licensor: In some agreement it is written that the keys and locks of
the premises shall be with licensor for all purposes. This again reinforces the fact that licensor
has granted merely exclusive rights to the licensee.

Termination of the Leave and License Agreement

The Termination of the agreement can be done by providing the prior notice to the licensee
according to the clause in your rental agreement.

 If both the parties by mutual consent agree to terminate the same at any time it can also
be done.

 Apart from these, the Licensor may also put some clause stating that the premises are to
be maintained in a proper manner, yearly increment of rent, Security amount, Rent and
Tenure of Agreement and penalize the Licensee if any furnishing or fixture is found out
of order. The penalty could be credited from the security or it could be over and above
the security amount depending on the loss incurred to the party.

The Advantages Of The Leave And Licence Agreement

At this point, we’d like to state that this particular deed favours the owner and not the tenant.
Don’t get us wrong, this deed does not Leave the tenant exposed or vulnerable, it just favours the
landlord by a certain margin, that’s all.
Let’s take a look at some of the advantages-
 The Leave and Licence agreement makes eviction and in general, getting the tenant to
vacate the house easier.
 Such agreements always indicate permission to occupy another’s person’s property and
never rights.
 No property rights are created in the favour of the lessee.
 No transfer of interest occurs.
 Keeps the Rent Control Acts away as this cannot be considered as tenancy. It falls under
the Indian Contract Act.