Property Lease And Licence Better Than Rent Agreement? Expert Reveals

Disputes between landlords and tenants have been an age-old issue in many parts of the country. Small disputes like the provision of amenities by the landlord can be easily resolved. Today, we will talk about a more pressing matter, that is the dispute over the possession of the concerned property. To avoid this, landlords started making rent agreements, but even today disputes over claims of possession are increasing. Currently, measures such as rent or lease agreements are being implemented to safeguard the interests of landlords.

Despite these agreements, there have been widespread attempts by tenants to unlawfully occupy properties. In response, property owners are increasingly turning to the option of lease and licence agreements. Similar to traditional rent or lease agreements, a lease and licence agreement involves some modifications in its clauses.

Property expert Pradeep Mishra is providing comprehensive details on the process of creating a lease and licence agreement and its associated benefits.

Whether it’s a rent or lease agreement or a lease and licence, all these documents are drafted unilaterally to safeguard the interests of the landlord and prevent unauthorised possession by tenants. They explicitly state that the property owner is providing it to the tenant for either residential or commercial purposes for a specified duration, typically ranging from 11 months to several years. If the property is leased for residential purposes, it cannot be used for commercial activities. If the agreement is not renewed, the tenant is obligated to vacate the premises. In a lease and licence agreement, the property owner is referred to as the licensor, while the tenant is termed the licensee.

Lease and licence agreements can be established for durations spanning from as short as 10 to 15 days, up to as long as 10 years.These agreements can be made exclusively on stamp paper through a notary. If the rental term extends to 12 years or beyond, it becomes mandatory to register the agreement with the court. This requirement arises from real estate falling under the jurisdiction of the state list. In various provinces across the country, the registration fee typically amounts to one to two per cent of the rent.

So which document should one go for? Lease and licence agreement or a lease/rent agreement?

In a lease and licence agreement, it is explicitly stated that the licensee, or tenant, will not assert any rights or claims over the property. This ensures that the landlord maintains full ownership rights, even if the property is temporarily occupied by the tenant. Another advantageous aspect of such agreements is that if one of the parties to a rent or lease agreement passes away, their successor or heir can continue the agreement with mutual consent from both parties.