It is very common to hear the word Lease or Leave and License being used by

someone known to us in our daily lives. Whilst most of us know the essential
meaning of these terms, most people may not be aware of the actual rights
transferred under such arrangements.
We have attempted, in this article, to bring to the notice of the readers the legal
meaning of these terminologies, the rights and liabilities of a lessor and a lessee
and the concept of lease vis--vis that of a leave and license under Indian law.
Lease of Immovable Property
Leases are governed by the provisions of the Transfer of Property Act, 1882. As per
Section 105 of this law, the lease of an immovable property is a transfer of a right to
enjoy the property for a certain period of time or in perpetuity and for a certain
price (in cash or in kind) paid or agreed to be paid over a period of time by the
lessee to the lessor on such terms agreed between the parties.
This legal arrangement therefore confers rights and imposes duties on both the
lessor and the lessee of the property. We will now explore some of these rights and
liabilities of each person.
Rights and Liabilities of the Lessor
As per Section 108 (A) of the Transfer of Property Act, 1882, the rights and liabilities
of a lessor include:

Disclosing to the lessee material defects, if any, in the leased property;

Putting the lessee in possession of the leased property on his request;

Allowing the lessee to peacefully hold and enjoy the leased property on his
paying the rents reserved to him on time and performing the contract binding
on him.

Rights and Liabilities of the Lessee

As per Section 108 (A) of the Transfer of Property Act, 1882, the rights and liabilities
of the lessee include the following:

Any accession made to the leased property shall be comprised in the lease;

The right to determine the lease if the leased property is destroyed

substantially and becomes unfit for the purpose it was leased for due to any
Act of God, provided the injury occurred is not due to the wrongful acts of
the lessee;

The right to carry out any repairs to the leased property and thereafter
recover the amount spend for such repairs from the monthly rent payable by

him, if the lessor neglects to carry out such repairs on time as requested by
the lessee;

If the lessor neglects to make any payment which he is bound to make within
a reasonable time, the lessee has the the right to make such payments and
recover the same with interest from rent payable to the lessor;

The right to remove all articles from the leased property even after
determination of the lease and during the lessees possession in the leased
property, provided the lessee leaves the property in the state which he has
received it;

The lessee is entitled to all the crops planted or sown by the lessee upon the
leased property and he may carry them after termination of the lease and
while he is in the possession of the leased property;

The right to sub-lease/sub-let, or transfer absolutely or by way of mortgage,

the leased property to any other third party subject to their being no
restriction of any kind to it in the contract. Even after such sub-lease/sub-let
the lessee will still be liable to all its liabilities under the lease deed;

The lessee is bound to disclose to the lessor all or any facts pertaining to the
leased property of which the lessor is not aware and which materially
increases the value of such interest;

The lessee is bound to pay the rents on time;

The lessee is also bound to keep the leased property in good condition and,
after termination of the lease, to restore the property as it was at the time
when he was put in possession, subject to reasonable wear and tear;

The lessee is bound to allow the lessor and his agents to enter the leased
property at all reasonable times and inspect the premises thereof and give
notice of any defects caused by the lessee or his agents to the leased
property. The lessee is bound to make good such defects within three months
of such notice;

The lessee is bound to keep the lessor informed of any proceedings made to
recover the leased property or any pat thereof or any encroachment made
upon or any interference by the third party to the leased property;

The lessee is bound to use the leased property only for the purpose it is
leased for and to not carry out any illegal or any non-permissible business on
such property;

The lessee is bound to put the lessor in possession of the property on

determination of the lease.

A reading of the above shows that in a lease arrangement, the lessee is given the
right to enjoy the property without any disturbance or hindrance from the lessor
during the agreed term. In addition to those listed above, the lessee and lessor are
also entitled to certain other rights.
While a lease grants a certain interest and rights in leased property in favour of the
lessee, another manner in which a right may be given in an immovable property is
through a leave and license arrangement, also called a license. A license is a
mere right to use which is transferred to the licensee herein. We have, below,
briefly introduced the concept of a license as defined under law and endeavoured
to bring to the notice of the readers the basic differences between a lease and a
leave and license under Indian law.
License of Immovable Property
As per Section 52 of The Easements Act, 1882, the license of an immovable
property is a mere grant of right by the licensor to the licensee to enjoy the licensed
property, and which in absence of such right, would be unlawful, and such right
does not amount to an easement or an interest in the licensed property. Another
important aspect of a license is that anyone who has any interest in the property
can license the property it need not necessarily be the owner of the property in
question.
Right and Liabilities of a Licensor
As per Section 52 of The Easements Act, 1882, the rights and liabilities of the
licensor includes:

Disclosing to the licensee any defect in the property licensed which may
affect the licensee and which the licensee is not aware of;

Not to do anything likely to render the licensed property in a state which may
affect the licensee. If the licensor transfers such affected property the
licensee is not bound by such license.

Rights and Liabilities of a Licensee

As per Section 52 of The Easements Act 1882, the rights and liabilities of the
licensee includes:

Being bound to leave the licensed property within a reasonable time and to
remove all his goods placed on the licensed property on determination or
earlier termination of the license;

Being entitled to the refund of the consideration paid by him on the

termination or determination of the license.

While some of the rights and liabilities of a lessor and lessee are similar to the
corresponding rights and liabilities of a licensor and licensee, some of the important
differences between a lease and a license are as follows:
Lease of Immovable Property

License of Immovable Property

The lessee is given the exclusive

possession of the leased property

The licensee is given a mere right

to use and occupy the licensed
property for a period of time

It is a transferable right i.e., if the

lessor sells the leased property to
any third party during the
continuance of the lease the
purchaser is bound by the existing
lease deed

It is only a personal right i.e., if the

licensor sells the licensed property
to any third party the leave and
license agreement (if any)
automatically gets terminated

If the lessor has to enter the leased

premises for any inspection or
repairs, he can only after giving a
prior notice and obtaining the prior
approval from the lessee

The licensor is free to enter his

licensed premises at any point of
time

Lessee under certain circumstances

may be considered as a tenant and
has all the rights as per the
applicable tenancy laws

Licensee is not considered as a

tenant and is not covered under
any tenancy laws

Normally the stamp duty applicable

to a lease is high

Stamp duty may be lesser than the

Lease, however in certain states
(for example in Maharashtra) a
license exceeding a certain period
is considered as a lease and the
same stamp duty as a lease is
applicable to it.

It is therefore in the best interest of the owner of a property in question and the
person taking such property on lease or leave and license to firstly understand
whether they would like to lease or license a property and thereafter enter into a
detailed lease or leave and license agreement, as the case may be, to ensure that
their rights and liabilities are protected as per the provisions of law.

Disclaimer: This article is to bring to make a reader understand the meaning of a

lease and leave and license and the rights and liabilities that is given under law. The
above information / suggestions / guidelines / tips are generic in nature and should
not be acted upon unless a professionally qualified legal consultant has examined
the requirements of the transaction and has advised that some of the above terms
may be made applicable to a proposed transaction.
The information provided is as is, and as available and the information provided
may include inaccuracies or typographical errors.