Frequently Asked Questions
A leave and license agreement is an instrument/agreement wherein the licensor allows the licensee to temporarily occupy and use one portion of immovable property for carrying on his business for residential purposes.
Yes, any agreement for leave and license or letting of any premises, shall be in writing and shall be registered under the Registration Act, 1908. An agreement of licence in writing shall be conclusive evidence of the fact stated therein.
The responsibility of getting such agreement registered shall be on the landlord and in the absence of the written registered agreement, the contention of the tenant about the terms and conditions subject to which a premises have been given to him by the landlord on leave and license or have been let to him, shall prevail. Any landlord who contravenes the provisions of this section shall, on conviction, be punished with imprisonment which may extend to three months or with fine not exceeding rupees five thousand or with both.
The provisions relating to standard rent and permitted increases will not apply to any premises let or given on license in a building.
A licensee only has the right to occupy and use the property as a mere licensee. A licensee cannot transfer his right over the property and also does not have exclusive possession of the property. The legal possession of the property is deemed to be that of the licensor.
Any licensee who does not deliver possession of the premises to the landlord on expiry of the period of license and continues to be in possession of the licensed premises till he is dispossessed by the Competent Authority shall be liable to pay damages at double the rate of the license fee or charge of the premises fixed under the agreement of license.
A licensee in possession of premises on license for residence shall deliver possession of such premises to the landlord on expiry of the period of license; and on the failure of the licensee to so deliver the possession of the licensed premises, a landlord shall be entitled to recover possession of such premises from a licensee, on the expiry of the period of license, by making an application to the Competent Authority, and, the Competent Authority, on being satisfied that the period of license has expired, shall pass an order for eviction of a licensee.
Any person who is legally entitled to enter into a contract may take a property under lease or leave and license.
Any kind of immovable property, including land, flats etc. may be taken on lease or leave and license unless there is a restriction on the transferability of the rights of such property.
The following are some of the differences between lease and a license:
A lock-in period is a period within which any party or both parties cannot terminate the agreement/agreement. Typically a breach of the lock-in provision involves payment of a penalty which typically is the rent/ license fee for the balance term of the agreement/agreement. The lessor/licensor can also contractually recover the penalty from the refundable security deposit. The lessee/licensee can contractually refuse to hand over possession of the property till such time that he/she has not received the rent/ license fee for the balance term of the agreement/agreement.
There is no minimum or maximum period for a lease or leave and license.
Force majeure are events the occurrence of which are outside the control of the parties such as natural calamities, change in legislation etc. In case of such events, the parties are generally relieved from their obligations under the agreement/agreement. Force majeure has no general definition under law and what events constitute force majeure should be specifically set out in the agreement/agreement to avoid any ambiguity. pariatur, quidem? Voluptatem architecto quam nisi, molestiae saepe quo expedita odio corporis.
Any person who is legally capable of entering into a contract may act as a witness other than the parties to the agreement.
No. It is not compulsory that an agreement has to be signed by witnesses. However, it is good practice to have witnesses sign as, by signing, they essentially confirm that they have witnessed the parties to the agreement sign such agreement.
While it is not mandatory, but generally, both owner and lessee/licensee initial on:
DThe agreement should contain the provisions for termination. Typically, the agreement may be terminated by (i) mutual agreement between the parties or (ii) on breach or default by either party of the terms of the agreement or (iii) on expiration of the duration of such agreement.
Other than what is agreed under the agreement/agreement, on the termination of the agreement, the lessee or the licensee should vacate the property and the lessor or the licensor should return the security deposit, if any.
A clause on escalation of license fee can be included in a leave and license agreement and it will not convert a license into a lease. However, in a State like Maharashtra if an automatic renewal clause is incorporated in the leave and license agreement which makes the leave and license agreement for a period of more than 5 years, then stamp duty will have to be paid as payable on a lease agreement.
As per section 23 of the Registration Act, 1908, the document should be presented for registration with 4 months of its date of execution.
When a notary notarizes a document/agreement it means that he has seen the original document/agreement and compared and verified the contents of the original document/agreement with the copy of the document/agreement he is notarizing. A notary essentially confirms that the copy of the document that he has verified is a true copy of the original. As there is only one original document that is stamped and registered, if more than one copy is required of such document/agreement, then such copy is notarized.
An indemnity arises when one individual takes on the responsibility to pay for any loss or damage that has been incurred or might be incurred by another individual. The right to indemnity and the duty to indemnify ordinarily stem from a contractual agreement, which generally protects against liability, loss, or damage. Therefore, if a person suffers any loss or damage due to the actions of the other party, the other party is required to compensate the indemnified party for the loss or damage caused.
Generally, any lease agreement or leave and license agreement for a period below 1 year is not required to be mandatorily registered. Any lease agreement or leave and license agreement for a period above 1 year should be compulsorily registered. However, in States like Andhra Pradesh and Maharashtra, lease agreement or leave and license agreement for a period below 1 year is also compulsorily registrable.
Registration of any document proves the validity and enforceability of a document. To prove any dispute between the parties, the agreement will have to be produced before the Court. However, if such agreement is not registered then such agreement will not be enforceable and not admitted by the Court. Additionally, the Court has the power to impound such document and require the parties to pay the deficit stamp duty together with any penalty/fine/interest as may be applicable. Therefore, if the agreement is registered, it will be difficult for either party to deny the existence of the document and go back upon its obligations.
Stamp duty is a kind of tax like Sales Tax or Income Tax i.e. an amount you have to pay to the government when you enter into a particular transaction through an agreement. It is called "stamp duty" because the amount is paid by executing a written document on stamp paper. The stamp duty varies from State to State and is dependent upon the nature of the agreement. It must be paid in full and on time to the Government. In case of delay in payment of stamp duty, penalties are imposed.
The Indian Stamp Act, 1899 as applicable in the respective States or the Stamp Act enacted by the States lay down the guidelines and the method of calculation of the stamp duty.
The sub-registrar can refuse to register the agreement if full stamp duty has not been paid. The authorities have the right to impound inadequately stamped documents and require the payment of the differential stamp duty together with any penalty, fine or interest. Inadequately stamped contracts are also such inadmissible as evidence in Court for purposes of enforcement of such contracts.
It differs from State to State. The stamp duty in certain States like Maharashtra and West Bengal is calculated on the basis of the location of the property such as under a municipality or under a panchayat. Registration fee is independent of the type or location of the property.
No. It cannot be done because as per Registration Act, 1908 documents are required to be presented for registration in the office of sub-registrar within whose jurisdiction the property or a portion of the property is situated.