The Rent Agreement or a lease and License Agreements are the most important documents that are required at the time of taking a property on rent. While dealing with any rent/lease contract a landlord and tenant OR lessor and lessee, the person must take the services of a professional lawyer as these contracts involves the legal provisions of the acts. For drafting any flawless lease or rent agreement requires complete knowledge of the legal aspects of the contract to prevent any apprehension of future complication for the each party. For these contracts it is important that both the parties legally competent to enter into a contract. Some persons who is a minor, insane insolvent is not are incompetent to enter into a valid contract. When any residential property is letting out, a landlord and a tenant entered into an agreement, it could be a licence or a lease . When these terms are used interchangeably in common phrase, they are inherently different. Where a lease gives more rights to a tenant, a licence is favored towards landlords. Under a lease, an exclusive possession over the property is granted for a specific time period. The lease is defined under Section 105 of the Transfer of Property Act, 1882 defines the lease and Licence is defined under Section 52 of the Indian Easements Act, 1882. However, merely heading the agreement as rent/lease or licence does not make it legal in the eyes of law. The agreements must be clearly indicated the intent of the parties and not only the connotation of the agreement. In case of any dispute, the court would take the agreement and the intention of the parties into consideration. Here are the some important point to keep in mind.

What is a Rent/Lease Agreement?
A lease is a transfer of the right to use the property in which may be for a specified period on a fixed amount to be paid s rent. The tenant/lessee is entitled to stay in possession of the property till the lease agreement is terminated and it is not possible to evict the tenant or leaseholder before the expiration of the lease unless there is a condition for terminating the same is provided in the lease agreement itself. The owner of the property is called “Lessor” and the person who is enjoying the right or use the property is called “Lessee.”

The licence :
Section 52 of the Easements Act, 1882 defines the licence where an owner authorizes to another party to use his property for certain purpose. A licence is an approval to perform some act upon another person’s property without giving any rights of possession. No easement is granted over such property and the owner can revoke the permission to stay at any time. The party lawns, Guest house, hotels are generally rented out on the bases of a licenced agreement.

The difference between Lease and Licence :

  • In a lease, a transfer of right to use property is done in favour of the tenant, while in a licence no right over the property is transferred.
  • A lease is transferrable to a third party. A licence is of personal nature and can only be use by the person to whom it is given. The licence neither be transferred nor inherited.
  • After the death of either the grantor or the grantee, a licence will be ended but in case of a lease, it does not come to an end on the death of either party and could be continued by their representatives.
  • A licence can be revoked easily. In case of a lease it could be terminated as per term of the contract.
    In case of licence a licensee does not have any proprietary right and cannot sue the owner but in a lease a lessor can sue the owner for protection of right to possession.
  • In case of a lease, the right to possession remains with the tenant while in case of licence the owner enjoys the right to possess. For eviction of a lessee an eviction suit needs to be filed before the court. In case of a licence the possession by the licensee becomes unlawful by itself.
  • A lease can be cancelled by issuing a notice to the lessee but in case of a licence, it can be cancelled even without a notice.
  • In a lease, it is compulsory to mention an amount in the agreement/contract, unlike a licence.