Lease or Licence

Querist : Anonymous (Querist) 19 May 2010 This query is : Resolved
Lease or Leave and Licence agreement, which one is better option to give a residential property to a tenant. Can licence agreement be made in respect of a residential property or it applies on commercial property only. Is regn. of licence agreement compulsory.

Follow Query

Report Abuse

A V Vishal (Expert) 19 May 2010
Lease or Leave and Licence agreement, which one is better option to give a residential property to a tenant.

Ans. Leave and License is the best option.

Can licence agreement be made in respect of a residential property or it applies on commercial property only.

Ans.Yes

Is regn. of licence agreement compulsory.

Ans. Yes in many states even a license for 11 months is compulsorily registrable.

You have not stated where the property is situated and the term of the agreement you want to enter.

Daksh (Expert) 19 May 2010
Dear Anonymous,

Some points which enumerates the difference amongst the lease and licence are important are as follows:

TERMINATION:
In Lease it is either termination which happens prior to the period or on expiry of term on efflux of time, there is a pre-condition to issue notice as per Section 104 to 106 of TPA. In lease after termination if the tenant continues to occupy the tenancy premises, he is held as "tenant holding over" Section 116 TPA, and cannot be thrown out of the premises without due process of law.

In License the occupant becomes a rank tresspasser and has no right as holding over rights and becomes the occupant on sufference.

POSSESSION:

In Lease if a person creates any artifact or fixture of permanent nature, the person, only owns the same and the lease does not become irrevocable. However, in case of License, where the user right of a land is provided and the person makes some fixture of permanent nature, the License becomes irrevocable (Section 62 Easement Act).

LITIGATION:

In Lease, where possession is sought back, the court fees is paybale on the annual rent (Court Fee's Act).

In License, where right is deteremined, the court fees is payable on the market value of the property (Court Fees Act). License is a right of a person over a property.

However, in License, there is a general tendency, where licensors file a suit for permanent and manadatory injunction, seeking reliefs to the extent that the Licensee stop the user of the premises and a direction against licensee to remove its articles and artifacts from the premises.

RIGHT:

In Lease, the right is passed on to Legal Heirs.Lease is a right of a property vested in a person.

In License, it is not.License is a right of a person over a property.

I hope your query gets satisfied.
Best Regards

Daksh

N.K.Assumi (Expert) 19 May 2010
Licence is a permission given by one person to anther to do in or upon immovable property of the grant or something which would, but for such permission, be unlawfu; provided the right does not amount to easement. It differs from lease.1. a lease gives an exclusive interest in the property whereas a licence can not; 2. a lease canbe assigned to a third party while licence can not. 3.A lease can bring an action for tresspass, a licence can not. 4.a lease id not revocable, a licence can be revoked.