"leave and licence agreement" or lease
Sanjay
(Querist) 15 December 2009
This query is : Resolved
Dear Experts,
I have a spare flat in Delhi that I want to rent. I am aware that the laws in India are very landlord unfriendly and the tenant may refuse to vacate at the time of expiry of the agreement. I want to structure the agreement in such a way that such a risk is totally avoided. I am also interested in registering the written agreement. Essentially I want to do everything by the book, so that I am protected in the case of any mal-intentions on the part of the tenant.
1. I have heard that the agreements one can enter into are either a lease agreement or a "leave and licence" agreement. Is that true?
2. Also I believe the "leave and licence" is more favourable to the landlord. From anecdotal evidence I believe that "leave and licence" are more common in Mumbai and lease agreements more common in Delhi. Is that because there is a difference in the law between the two states?
3. Paying additional charges such as registration and stamp duty are not a concern to me. I believe that entering an agreement for less than 12 months (say 11 months) is a good way to protect the landlord from the tenant laying any claim to the property. Is that true or does the tenure of the "leave and licence" or lease not matter?
4. From my understanding of the above points it appears to me that a "leave and licence" agreement with a tenure of 11 months would provide maximum protection to me as a landlord (I can renew the agreement every 11 months). Is that true for an apartment located in Delhi? Also does this provide me a watertight protection or is there still a chance of the tenant refusing to vacate and the case lying unresolved in the courts for a long time?
Thanks and regards,
Sanjay
S.KARUNAMOORTHY
(Expert) 15 December 2009
The fact behind which for 11 nonths agreement is that, according to Transfer of property act, any agreement for not less than 12 months has compulsorily to be registered. and one more thing those documents which are not registered can not be admitted in the court as evidence. its better u could enter into 11 months agreement insted of going for registration of agreement. if the tenent has not vacated after the 11 months u can disconnect the electricity line, its lawful activity only.now a days without electricity... immagine?
Sanjay
(Querist) 15 December 2009
i am sorry but i think i have not explained myself properly. i want to register the agreement whether it is less than 12 months or more. i don't want to reach a situation where i have to disconnect the electricity. my question was as to what is the most efficient legal way to structure this agreement so that both the tenant and the land lord as best off (if the tenant is bona fide). if the tenant is not bona fide, then I want to protect myself in the best possible way. please refer to my original post to cover all the points i made.
thanks and regards
sanjay
R.R. KRISHNAA
(Expert) 15 December 2009
Dear Sanjay
Leave and licence agreement helps the owner to evict the tenant any time and the tenant cannot have the help of the tenancy laws. Because tenancy laws apply only for tenants under leases and not under leave and licence agreement (I am not sure about law prevailing in delhi). As per leave and licence agreement the tenant would be termed only as a user or licencee and he can be evicted any time and he would not have protection of laws. It is advantageous for you. There is no need for you to choose 11 months or more than 1 year. Get drafted a good leave and licence agreement from a expert.
But if you think that the tenant is a bonafide and reliable person, then you can afford him a status of tenant by entering into lease agreement. Then it would be good for both of you.
Best wishes
Sanjay
(Querist) 15 December 2009
thank you Krishna. appreciate the reply.
i was browsing through the entries on this forum and came across a reply by an expert that stated that even if one goes for a leave and licence for less than a year and renews it after that then the landlord does not have the right to evict the tenant. this is because the court looks at the substance and not the form of the agreement. if the tenant can prove they have stayed at the flat for over a year (through bills), they can still claim the rights of a tenant. is that the case?
R.R. KRISHNAA
(Expert) 15 December 2009
Each case depends on its own facts and circumstances. If you are able to draft the leave and licence agreement clearly stating that it is only a licence certainly the courts will not interfere with the same.
As regards the opinion of the expert stated by you, it is true that the court looks into the substance not the form of the agreement. It however does not mean that a leave and licence agreement made for less than a year cannot be renewed thereafter. We have to look through the facts of the cases in which that expert has given the opinion. But I think that opinion certainly will not apply to your querry.
A licencee is always a licencee unless he is able to prove that he was treated as a tenant and the agreement in fact was only a tenancy agreement and the intention was only to create tenancy.
I hope this clarifies your querry.
