LEAVE AND LICENSE AGREEMENT
The demand to live in a place like Mumbai, what we call the ”city of dreams”, where millions flock to pursue their dreams, be it education, career, hobby or livelihood, it is but obvious, property prices and the demand for rented houses is high.
What Is A Leave And License Agreement?
A license, as defined under Section 52 (Chapter VI) of the Indian Easement Act, 1882 is an agreement ‘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 the immovable property of the grantor, something which would, in the absence of such a right be unlawful.’
Leave and license agreement is a document that gives the Licensee permission to occupy a Licensor’s (landlord’s) property on leave and license basis, as opposed to rental agreement which creates tenancy. Such agreements make eviction easier and hold greater powers in thee hand of the Licensor.
These agreements are also different from leases which are known to create an interest in the property. And, unlike leases, leave and license agreements are not transferable because a license generates personal rights.
Procedure To Make Leave and License Agreement In Mumbai
A typical leave and license agreement for use in Mumbai would contain the following details-
- Licensor’s name, address and contact info
- Licensee’s name, address and contact info
- Address of the property involved
- Term / duration of contract
- Security deposit, license fee and other charges, if any
- Clauses of both parties’ choice
Registration And Its Procedure
As per the Rent Control Act of Maharashtra, 1999, a leave and license agreement between a licensor and a licensee must be in writing and must be registered under the Registration Act, 1908. This means that in all of Maharashtra and not just Mumbai, this rule is applicable.
Registration essentially means, applying a seal of authenticity to the agreement. Therefore, Courts consider an unregistered agreement only as collateral evidence and never as primary evidence.
Compulsory registration of agreement within 4 months from date of signing.
The Maharashtra Govt. has taken the initiative to simplify registration process in the form of e-registrations. Many Govt. approved e-service providers help with the registration of leave and license document from home. They currently provide registration services for commercial and residential leave and license documents.
Doorstep services are also available.
Stamp Duty Calculation
Stamp duty is the fee/ tax levied as recompense for making your agreements legally valid. The prescribed Stamp duty for various documents varies from state to state. Typically, for leave and license agreements, it is the Licensor’s / landlord’s job to pay recommended Stamp duty for the agreement. As per Article 36 A of The Bombay Stamp Act, 1958, Stamp duty for leave and license agreements is 0.25% of the taxable amount.
Never mist out in the following clauses for your agreement:
- Date of commencement of license
- Effective period or term of license
- Clauses that allow/ disallow renewal
- Stipulated escalation (if any) at the end of term
- Security deposit, monthly rental payments and maintenance charges if any
- Also the permission to keep house pets
- Responsibilities/covenants of both Licensee and Licensor
- Consequences of breach.
All the best finalizing on finalizing your new leave and license.