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I have constructed a residential complex which I would like to let out. My son suggests having leave and license agreement, instead of lease or rental agreement.  Please inform what is the difference between rental agreement with leave & license agreement?

- by Premraj, Davanagere

In case of lease or rental agreements, you would be transferring possession of the property by retaining the ownership. The lessee or tenant will be in the possession of the property on payment of lease amount or rent.  The tenant acquires tenancy rights.

In case of leave & license, you retain both the ownership and the possession, but merely permitting somebody to use property for certain specific purpose on certain condition. Here the possession continuous to be with the owner of the property, unlike in case of lease or rental agreement. The licensee will not get any tenancy rights. What is most important here is the intention of the parties and not the documents. The difference between lease/rent or leave and license is very thin.

In case of any dispute, the court will rely more on intention of the parties, than on what is exposed in the documents.

Earlier, stamp duty payable on leave and license was less but recently many states have revised at par with lease agreement. In Karnataka leave and license agreement attracts ad valorem.


These are all the legal questions answered by Advocate S.Selvakumar in various magazines, in various occasion including realestate reporter monthly.