Udyogwardini | Leave and License Agreement Drafting

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What is Leave and License Agreement Drafting?

A leave and licence agreement is a legal document that allows one party to allow another to use their immovable assets, such as property, for a fixed length of time without changing the asset's ownership. It is a contract /agreement between a landlord and a tenant in which the landlord grants the tenant the right to occupy the place. It is applicable for the duration/term mentioned in the agreement. A lease generates an exclusive interest in the property in the tenant's favour, but a leave and licence agreement does not create any interest in the property in the tenant's favour.

What is Leave and License Agreement Drafting?

A leave and licence agreement is a legal document that allows one party to allow another to use their immovable assets, such as property, for a fixed length of time without changing the asset's ownership. It is a contract /agreement between a landlord and a tenant in which the landlord grants the tenant the right to occupy the place. It is applicable for the duration/term mentioned in the agreement. A lease generates an exclusive interest in the property in the tenant's favour, but a leave and licence agreement does not create any interest in the property in the tenant's favour.

Leave and Licence Agreement's Features

Leave and Licence Agreement's Features:

Participating individuals can contractually decide the amount required as a licence fee, deposit, and other charges.

A typical contract lasts eleven (11) months.

When it comes to tenant cancellation and eviction, the owner has more discretion and privileges

There is no interest transfer from the owner to the tenant.

There are no property rights generated.

Benefits Of A Leave And Licence Agreement:

  • Makes eviction and persuading the renter to leave the house in general much easier.
  • There are no property rights formed in the lessee's favour.
  • There is no transfer of interest.
  • Because this is not a tenancy, the Rent Control Acts are not applicable and it falls under the Indian Contract Act.

Documents Required for Leave and License Agreement Drafting:

For registration of the agreement, you will need some basic documents of the tenant, landlord, and the witnesses, such as

  • Images of the owner's PAN and Aadhaar,
  • Tenant's Aadhaar card images
  • Electricity bill image OR Index II OR Tax Receipt for rented premises
  • Aadhaar images of two witnesses
  • Duration and Start Date of the Agreement
  • Amount of the deposit (Transferor Bank Name, Date, Transaction No or Cheque No),
  • Rent & Increment on a Monthly Basis,
  • Furniture and Appliances List
  • Additional Documents for the Company and Firm - Licensed Premises' Index II or Tax Receipt or Electricity Bill
  • If the party is a corporation, it must provide a board resolution, the corporation's PAN and CIN numbers, and the authorized signatory's Aadhaar number.
  • If the party is a partnership firm, the following documents are required: Partnership Deed, Authority Letter, Partnership Firm's PAN Card Number, Aadhaar of all Partners or Aadhaar of Authorized Partner.

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