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Leave and License Agreement for Flat (Drafting)

Leave and license agreement is legally enforceable agreement. On the breach of any terms and condition of leave and license agreement by licensor or licensee, they both can sue each other on the basis of Leave and license agreement. Commercial leave and license agreement is an authentic proof for your Private limited/LLP/ or any other business entity as a registered office.

A leave and license agreement is an agreement wherein the licensor allows the licensee to temporarily occupy and use one portion of immovable property for carrying on his business or residential purposes.“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 immovable property of the grantor, something which would, in the absence of such rights, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.”

 

LEAVE AND LICENSE AGREEMENT (Commercial)

 

BASIC INFORMATION

A leave and license agreement is an agreement wherein the licensor allows the licensee to temporarily occupy and use one portion of immovable property for carrying on his business or residential purposes.Leave and license is usually granted for a period of 11 months.

Section 52 of Indian Easement Act, 1882 defines License as under:

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

 

FEATURES OF COMMERCIAL LEAVE AND LICENSE AGREEMENT

 

1. LEGALLY ENFORCEABLE: Leave and license agreement is legally enforceable agreement. On the breach of any terms and condition of leave and license agreement by licensor or licensee, they both can sue each other on the basis of Leave and license agreement.

 

2. ADDRESS PROOF: Commercial leave and license agreement is an authentic proof for your Private limited/LLP/ or any other business entity as a registered office.

 

3. CLARITY: A registered leave and license agreement ensures that neither the licensee nor the licensor can go back on their commitments or exceed their stay in case of a dispute.

 

4. DEDUCTION FROM BUSINESS INCOME: For authentic deduction of income from business Auditor/CA may ask for leave and license agreement. Leave and License agreement mention specific clause regarding rent so it will help you in case of deduction of rent from business income.

 

5. GST REGISTRATION: Commercial leave and license can also be utilized for GST Registration as an authentic proof.

Documents


Passport Photo

Passport photo of all parties.


PAN Card

PAN card of all parties.


Aadhar Card

Aadhar card of all parties.


Utility Bill

Utility bill of Electricity or Telephone.


Address Proof

Valid Address Proof of all the parties.


Licence

Valid Driving Licence of all the parties.


Terms and Conditions

Terms and Conditions between the parties.


Other Documents

Other documents will be intimated through e-mail.

FAQ

A Leave and Licence agreement is a document that bestows the Licensee with the permission to occupy the Licensor's property. Hence the occupancy is granted on Leave and Licence basis and not on tenancy basis. Such an agreement makes eviction easier and is general provides the landlord with greater power.

It is mandatory to register a leave and license agreement (Section 17 of the Registration Act, 1908). The agreement has to be registered with the sub-registrar's office. Signatures of two witnesses are required while registering the agreement.

A leave and license are different from a rental or lease agreement. It is governed by the Indian Easement Act, 1882. According to this, in case of leave and lease, the owner leaves the place with various facilities and gives the same to the licensee for use while the owner is on a leave for a specific period of time.

Section 55 of the Maharashtra Rent Control Act, 1999, mandates the registration of a Tenancy or Leave and License Agreement. Failing to adhere the same can result in imprisonment up to three months and a penalty amounting to Rs. 5000.

Most rent agreements are signed for 11 months so that they can avoid stamp duty and other charges. According to the Registration Act, 1908, the registration of a lease agreement is mandatory if the leasing period is more than 12 months. The stamp paper can be in the name of the tenant or the landlord.

For rental agreements made for a tenancy period of 11 months or less, a stamp paper of Rs 100 or Rs 200 can be utilized. Along with this, a stamp duty i.e. equals the lesser of 1% of the total rent plus the deposit paid annually or Rs 500 is also payable.

Is there any penalty for not registering the rental agreement? Yes, if somehow you do not register the rent agreement with the authorities, you may end up paying 10 times the original amount (plus the outstanding registration charges and stamp duty charges) as a penalty.

Both the landlord and tenant are responsible to make the rent agreement. If the rent agreement was not renewed then the landlord cannot deduct from the security deposit. If the landlord fails to return the security deposit then you can file a civil suit for recovery of security deposit amount.

In India, it is not mandatory to notarize a rental agreement. As long as it is printed on Stamp paper and is signed by both parties and by two witnesses, it is considered binding. However, if you wish to notarize it, you may do so.