Showing posts with label Leave. Show all posts
Showing posts with label Leave. Show all posts

Saturday, May 16, 2020

You should know the difference between a Leave Agreement and License agreement and Rent agreement


If you are looking for a house for rent or a house is rented, then you must have come up with terms like leave and license agreement, and rent agreement.

Many people use these words thinking that it is the same things, but in reality, they are actually two separate documents and there are some important differences between them. Although in the end, they see the interest of both the landlord and the tenant, there are differences are:-

Property Ownership


In a leave and license agreement, the tenant cannot claim any ownership of the property because the agreement does not fall under the Rent Control Act of India. In this agreement, the owner licenses the property to the "tenant" and leaves the property.

When it comes to rental agreements, tenants can claim ownership of the property after living in the same place for at least 10 years. They can make this claim under the Rent Control Act of India. In this case, landlords have very limited options to vacate the tenant or increase the rent.

The leave and license agreement can be used anywhere in India as a valid address proof. It is a legal document that binds the licensor in terms of security amount, rent amount, length of stay, and other payments for the use of the property. These points cannot be changed once the agreement is signed by both parties. This is important for the tenant because it protects his rights to live there and his living conditions are clear.

A rent agreement that is registered grants the tenant some rights to the property. In Mumbai, many tenants are still paying Rs. 15 / month due to Rent Control Act and sitting on prime property. According to their rental agreement, as long as they pay the rent on time, they cannot be evicted. To avoid such a situation, execute the rental agreement only for 11 months. 11-Monthly rent agreement does not come under the Rent Control Act.

It is much safer to leave and license agreement for 11 months. After 11 months, the agreement should be renewed for the next 11 months. Limit your agreement to 11 months.

Rent Control Act


A leave and license agreement is governed by the Indian Relaxation Act, 1882. Here, it states that the owner leaves the property with various facilities; the same is given to the licensee for use while the owner is on leave for a specific period. Once the leave is over, and the owner returns, the licensee departs. When he leaves, it is his duty to leave the house in the same condition he was given.

He cannot make any major changes and that is all that should have been given with the property because the agreement is temporary. The property is to be used only for the activity that was originally mentioned or outlined in the agreement. For payment, a large amount is paid by the tenant at the beginning of the tenancy, and no monthly rent is paid thereafter.

In the Rent Control Act, the tenant takes the rented property from the landlord, paying a fixed amount as rent for commercial or residential use. Legally, the landlord cannot evict the tenant as long as the rent is being paid. The tenant pays a deposit and the monthly rent that was fixed in the agreement.

Rights of tenants and landlords


If you look at it, a tenant has far more rights and becomes more preferred when it comes to a rental agreement as it is regulated by rent control laws. They prevent landlords from overcharging, giving tenant’s greater right to own property.

A leave and license agreement is more landlord / owner friendly as in no case can their property be taken over by the tenant. There can be no major modification to their property.

If you need help with a rental agreement or leave and license agreement, leave it to the experts at SuGanta.com. We are here to make your documentation process easy and stress free.