Though there seems to be no difference between license and lease, yet these are quite different in our law. It is necessary to know the difference between the lease and license before conceding a right for another party to use your 2 bhk flat on rent or any residential property.
As a landlord, you can give your property via lease or license. However, you should consider your 2 bhk flat on rent via license and not lease. Leases and licenses both have right to enter as well as use other’s land. But there is a huge difference between the two.
Squatters are the biggest nightmares of the landlords. We have come across different incidents of tenants encroaching the property they are renting. An instance of a squatter denying to leave a residential property on rent might get dragged into an ungracious court battle and might not be serene.
In lease agreement, a landlord provides full control of his land or property for an amount agreed upon between the landlord and the tenant. The occupant can remain in full ownership of the property till the tenure of the lease. In metro cities license agreements, often termed as rent agreement, is used to lease out flats. In license agreement the occupant is allowed control over the property, however, the property owner is allowed to inspect the property with due permission from the occupant. For renting properties for commercial or business purposes a commercial license needs to issue.
According to the Indian Transfer of property Act, 1882, a leaseholder has the sole ownership of the leased property for a certain period of time. The property owner cannot claim his rights during this period of time. Whereas in the license system of the Indian Easements Act 1882 says, the renter can only use this property. But the proprietorship will remain with the owner. In fact, Leave and License Agreement gives the right to the owner to enter and use the property and here licensee has no right to object.
The Government of India has some directives issued under Model Tenancy Act for commercial and residential properties. This law ensures the balance between the duties and rights can be exercised by the tenant and the landlord and should be strictly defined by a rental agreement.
License agreement document can be used to decide the most suitable form of tenancy. If asked by the court, this document should be furnished to ascertain the relation between the two parties. It can be used substantially by both tenant and landlord in order to practice any drill in case of deviation from the terms and conditions mentioned in this document.