How is property leased out with a leave and licence agreement? | Mint
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Business News/ Money / How is property leased out with a leave and licence agreement?
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How is property leased out with a leave and licence agreement?

Under license, the licensee does not get interest or possession of the subject property but only a bare permission to use and occupy the property on certain terms and conditions as may be mutually agreed upon by the parties

A lease is governed by the provisions of Transfer of Property Act, 1882, and the interest in the subject property is transferred by the transferor, therein called the lessor, to the transferee, therein referred to the lessee. (iStockphoto)Premium
A lease is governed by the provisions of Transfer of Property Act, 1882, and the interest in the subject property is transferred by the transferor, therein called the lessor, to the transferee, therein referred to the lessee. (iStockphoto)

My father has been approached by several public sector undertakings (PSUs) for leasing the property that he owns in New Mumbai. How is leasing different from that of a leave and licence agreement? Additionally, is it necessary to register these documents with the PSU? 

—Name withheld on request 

Before your father enters any documentation, he must bear in mind a few vital differences pertaining to the concept of lease and a leave & license from a legal point of view though certain contractual requirements may be similar.

A lease is governed by the provisions of Transfer of Property Act, 1882, and the interest in the subject property is transferred by the transferor, therein called the lessor, to the transferee, therein referred to the lessee. This transfer of interest in favour of the lessee in fact gives the lessee a right to enjoy the subject property with possession for a specified period (term) in lieu or exchange of monetary consideration payable periodically upon execution of an agreement and such other terms and conditions the party may mutually agree upon. 

  A ‘license’ is governed by the provisions of Easement Act, 1882. The term license means a personal right granted to a licensee or other definite persons and is exclusive to the licensee unless otherwise agreed under the agreement between the transferor, therein referred to as the licensor and the transferee, therein the licensee. Under license, the licensee does not get interest or possession of the subject property but only a bare permission to use and occupy the property on certain terms and conditions as may be mutually agreed upon by the parties. 

In Maharashtra, a ‘leave and licence’ agreement is to be compulsorily registered as provided by the provisions of Maharashtra Rent Control Act, 1999. Irrespective of it being a lease or ‘leave and license’ agreement, both are required to be stamped and registered as per the applicable provisions of the Maharashtra Stamp Act and Registration Act.

Aradhana Bhansali is partner, Rajani Associates.

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Published: 28 Nov 2023, 10:25 PM IST
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