A leave and license agreement is one through which the licensee is allowed by the licensor to use and occupy the licensor’s immovable property (or a portion of it), for a temporary period of time. The use of such property can be residential or commercial - the terms of which are stated in this agreement. The rent for such use is paid by the licensee to the licensor. Leave and license is usually granted for a period of 11 months. Such terms and conditions are mentioned in the clauses of a leave and license agreement between the parties.
A leave and license agreement is different from a rental / lease agreement. In leave and license - the owner leaves the property with various facilities and gives the licensee the right to use it, while this owner (licensor) is on a leave for a period of time. Once this leave is over, the owner would return. Leave and license agreements are legal documents that record the promises, terms and conditions between the parties. These terms bind the parties to carry out the obligations mentioned in the agreement . These obligations include that of the licensee to pay the security and the consideration for using the property. Since an agreement is a legal document, failure to carry out these contractual obligations can attract lengthy legal disputes and penalties.
The relevant personal details of the parties such as full name, residential addresses and ages of the parties to the agreement,
Details regarding the premises in question,
Details regarding payment of consideration/rent,
Duties and responsibilities of and between the parties,
Duration of license or the term of the agreement,
Details regarding security deposit,
Details regarding maintenance, electricity and water charges,
License termination and extension,
Penalty clause explaining the details of what the penalty would be if either party defaults in fulfilling its duties in accordance with the agreement,
Details of fixtures and schedule of property,
Right to sub-license,
General clauses such as termination of agreement, applicable laws, dispute settlement clause, confidentiality, etc.), and
Date of signing of the agreement.
Draft of Leave and License Agreement
This Agreement is made at ...... this ...... day of ……......., 20___, between Mr. A hereinafter referred to as 'the Licensor' of the One Part and Mr. B of …………… hereinafter referred to as the 'Licensee' of the Other Part, as follows;
Whereas the Licensor is the owner of a piece of land at ………………………………... bearing Survey No ... with a building consisting of …………. floor ...... having built up area of about ..... square feet.
And Whereas the Licensee has approached the licensor with a request to allow the Licensee to temporarily occupy and use a portion of the ...... floor of the said building, admeasuring about ...... square feet for carrying on his ...... business, on leave and license basis until the Licensee gets other more suitable accommodation.
And Whereas the Licensor has agreed to grant leave and license to the Licensee to occupy and use the said ground floor portion of the said building and which portion is shown on the plan hereto annexed by red boundary line on the following terms and conditions agreed to between the parties hereto;
Now it is agreed by and between the parties hereto as follows..
1. The Licensor hereby grants leave and license to the Licensee to occupy and use the said portion of the ground floor/....... floor of the said building of the Licensor (hereinafter referred to as the Licensed Premises) for a period of eleven months from ...... The Licensee agrees to vacate the said premises even earlier If the Licensee secures any other accommodation in the locality where the said premises are situated.
2. The Licensee shall pay to the Licensor a sum of Rs………..... per month (calculated at the rate of Rs………..... per square foot) as License fee or compensation to be paid in advance for each month on or before the ...... day of each month.
3. All the Municipal taxes and other taxes and levies in respect of the licensed premises will be paid by the Licensor alone.
4. The electric charges and water charges for electric and water consumption in the said licensed premises will be paid by the Licensee to the authorities concerned and the Licensor will not be responsible for the same. For the sake of convenience a separate electric and water meter if possible will be provided in the said premises.
5. The Licensee will be allowed to use the open space near the entrance to the Licensed premises and shown on the said plan by green wash for parking cars during working hours of the Licensee and not for any other time and no car or other vehicle will be parked on any other part of the said plot.
6. The licensed premises will be used only for carrying on business and for no other purpose.
7. The licensed premises have normal electricity fittings and fixtures. If the Licensee desires to have any additional fittings and fixtures, the Licensee may do so at his cost and in compliance with the rules. The Licensee shall remove such fittings and fixtures on the termination of the license failing which they shall be deemed to be the property of the Licensor.
8. The licensed premises are given to the Licensee on personal basis and the Licensee will not be entitled to transfer the benefit of this agreement to anybody else or will not be entitled to allow anybody else to occupy the premises or any part thereof. Nothing in this agreement shall be deemed to grant a lease and the licensee agrees and undertakes that no such contention shall be taken up by the Licensee at any time.
9. The Licensee shall not be deemed to be in the exclusive occupation of the licensed premises and the Licensor will have the right to enter upon the premises at any time during working hours to inspect the premises.
10. The Licensee shall maintain the licensed premises in good condition and will not cause any damage thereto. If any damage is caused to the premises or any part thereof by the Licensee or his employees, servants or agents the same will be made good by the Licensee at the cost of the Licensee either by rectifying the damage or by paying cash compensation as may be determined by the Licensor's Architect.
11. The Licensee shall not carry out any work of structural repairs or additions or alterations to the said premises. Only such alterations or additions as are not of structural type or of permanent nature may be allowed to be made by the Licensee inside the premises with the previous permission of the Licensor.
12. The Licensee shall not cause any nuisance or annoyance to the people-in the neighbourhood or store any hazardous goods on the premises.
13. If the Licensee commits a breach of any term of this agreement then notwithstanding anything herein contained the Licensor will be entitled to terminate this agreement by fifteen days' prior notice to the Licensee.
14. On the expiration of the said term or period of the License or earlier termination thereof, the Licensee shall hand over vacant and peaceful possession of the Licensed premises to the Licensor In the same condition In which the premises now exist subject to normal wear and tear. The Licensee's occupation of the premises after such termination will be deemed to be that of a trespasser.
IN WITNESS WHEREOF the parties hereto have put their hands the day and year first hereinabove written.
Signed by the withinnamed Licensor Shri ................
in the presence of ............
Signed by the within named Licensee Shri .......
in the presence of .........
There are no specific documents required for the drafting and execution of an agreement for leave and license. However, ID proofs of the parties in order to confirm the names and permanent addresses of the licensor and licensee should be scrutinised. Documents evidencing the licensor's clear title of the property in question should also be examined.
No set procedure is applicable in the making of a leave and license agreement. Once the agreement has been drafted by a lawyer, it should be specifically and carefully read by both the parties to the agreement. Any necessary changes required to be made shall be carried out and once the agreement is finalised, it shall be signed by both the parties along with the requisite witnesses. The agreement for leave and license must be printed on stamp paper/e-stamp paper of proper value and signed by both the parties. The stamp paper value depends on the particular State in which it is executed. Each party should thereafter keep a signed copy of the agreement. If the laws require you to register your leave and license agreement, then it should be mandatorily carried out.
A leave and license agreement is required to be printed on stamp paper of correct value, as per the laws in different States. If (in accordance with Section 17 of the Registration Act), you are required to register your leave and license agreement, you must do so. A properly stamped and registered leave and license agreement is a valid evidence in the Court of law. Leave and license agreements are governed by Indian Easements Act, 1882.
One of the first and the most important steps that you must undertake is to hire a good documentation lawyer as he/she is aware of the nitty gritty of the legal procedures and necessary requirements involved in drafting of rent/lease agreements. A lawyer would draft such an agreement, better than you can yourself, since he/she has the necessary legal knowledge and experience to handle and draft such documents. He/She will be able to guide you and draft for you according to your particular situation - the facts, circumstances and needs involved. A documentation lawyer is aware of good drafting technique and the clauses that must be included in your agreement.
Hiring a good lawyer in order to draft such important legal documents is a prerequisite and will help you in more ways than one. He/She can also help with proper stamping and registration as the case may be. Even if you have received a leave and license agreement from the other party, it is the best step to hire a lawyer to proofread / vet the agreement before signing, in order to ensure that the terms and conditions stated in agreement are not against your interests or that it is not a one-sided agreement.
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