When it comes to renting property in India, two legal documents are commonly used – a leave and license agreement and a rental agreement. Although these two agreements may seem similar, there are some significant differences between the two. Here is a brief overview of what distinguishes the two types of agreements.
Leave and License Agreement
A leave and license agreement is a temporary agreement between the licensor (property owner) and the licensee (tenant) for the use of a property for a specific period. The agreement gives the licensee the right to use and occupy the property for a specified period, usually for 11 months.
Unlike rental agreements, leave and license agreements do not create any interest in the property for the licensee. It merely allows the licensee to occupy the property for the specified period. At the end of the term, the licensee is obligated to return the property to the licensor, and the agreement ends automatically.
One significant advantage of a leave and license agreement is that it gives the licensor more control over his or her property. If the licensee fails to follow the terms of the agreement, the licensor can terminate the agreement and take possession of the property. This makes it easier for property owners to remove problematic tenants.
A rental agreement, on the other hand, is a contract between the property owner and tenant that allows the tenant to occupy the property for an extended period. Rental agreements are typically used for rental properties that require long-term tenants, such as apartments or houses.
Unlike a leave and license agreement, a rental agreement creates an interest in the property for the tenant. This means that the tenant has a legal right to occupy the property and cannot be removed without following proper legal procedures, such as filing an eviction suit.
Another critical difference between the two is that rental agreements are subject to rent control regulations, which vary from state to state. In some states, rental agreements are subject to rent control laws, which restrict the amount a landlord can charge for rent.
In conclusion, while both leave and license agreements and rental agreements may seem similar, there are quite a few differences between the two. A leave and license agreement is ideal for short-term tenancies, while a rental agreement is the preferred choice for long-term tenancies. Property owners should carefully consider their needs before deciding which type of agreement to use. It is also advisable to seek legal advice to ensure that all legal requirements are met and to avoid any potential legal issues in the future.