Leave & License Vs Lease Agreement

The cardinal distinction between a lease and a licence is that in a lease there is a transfer of interest in the premises, whereas in the case of a licence there is no transfer of interest, although the licensee acquires a right to occupy the premises. When premises are given out on lease or tenancy basis the legal possession of the premises in these cases is also deemed to be transferred to the lessee and tenant respectively.

1. Lease is an inheritable right, which is available as a right against any person in the world. License is not an inheritable right. It is personal and exclusive to the Licensee and on death it automatically stands revoked.
2. Lease creates interest on the leased property in favour of the lessee. In License no such interest is created in the Licensee.
3. Lease interest can be assigned. License is not assignable.
4. Denial of Lessor’s title results in forfeiture of lease. It is not so in case of License.
5. Remedy of breaches in case of lease is that lease can be enforced. In the case of License only suit for damages can be filed.
6. Termination of lease requires notice to be served on the lessee. Termination of License can be done without notice.
7. Lease deed requires registration under Registration Act 1908 and Transfer of Property Act 1882 if the value of property exceeds Rs 100 or lease duration exceeds 11 months. Earlier in case of leave and License agreement registration was not compulsory. However according to recent amendment ,stamp duty and registration is made compulsory.
8. A Lessee can sue stranger or third party in his own name. A Licensee cannot do so.

A license is a personal right granted to a person to do something upon immovable property of the grantor and does not amount to the creation of interest in the property itself. It is purely a permissive right and is personal to the grantee. The normal clauses in lease agreements, if incorporated in the leave and license agreement, shall not hold good in the eyes of law unless some specific structuring is done to ensure the validity of such clauses.

Simply saying a leave and license agreement is more biased for the benefit of the land lords unlike a lease agreement where the interests of both the lessee and the lessor are well protected.