A license is a personal right of a person which is granted to do something upon immovable property of the grantor (an individual who conveys or transfers ownership of property) and does not amount to the creation of interest in that property. It is a permissive right and is personal to the guarantee (an individual to whom a transfer or conveyance of property is made). This agreement does not create any duty and obligation upon the persons making such grant and is, therefore revocable except in certain circumstances expressly provided in the Indian Easement Act, 1882.
Section 52 in the Indian Easement Act, 1882 defines “License” as:
Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, such right does not amount to an easement or an interest in the property, the right is called a license.
In Leave and license the owner gives mere permission to the licensee (the holder of a license) without the transfer of interest of property by the owner. If in case the property is sold to any third person, the agreement comes to an end immediately. If licensee tends to occupy the property longer than the time mutually accepted (generally 5 years) by the parties, they are believed to be unlawful occupants of the property. It ensures that there is no transfer of interest from the licensor (he person who grants a license to another) to the licensee (the holder of a license). The License is to occupy and use the premises in the mentioned duration on mutually agreed terms of the agreement.
The essential features of license are as under:
1. A license creates only a personal right or obligation and is not connected with the ownership of land / property.
2. A license cannot be transferred or assigned to anyone.
3. The License granted is purely a permissive right and can arise only by permission, express or implied, and not by other adverse exercise or in any other way.
4. The license granted only legalize certain acts which would otherwise be unlawful and do not confer any interest in the property.
Leave and License agreement is a formal binding contract between two parties which lays down the length and scope of the License to be granted along with other terms of License. It is usually signed for a period of 11 months and can be renewed once the term expires depending upon the mutual agreed terms of the Licensor and Licensee.
Advantages of Leave and License Agreement
1) Mentions Conditions: It specifies all the terms and conditions agreed by both the parties signing it.
2) Clarity: It gives clarity between the parties to follow the terms and conditions of the agreement.
3) Enforceable: It is enforceable from the date mutually agreed by both the parties in the agreement.
4) Secures property: The Agreement is a legal document and it is in written form. It secures the property of the Licensor from any fraud.
5) Legally Binding: The Agreement is a legal document. It is binding on both the parties signing it and the terms and conditions agreed are to be fulfilled by both the parties.
Most of the leave and license agreement have the following under mentioned clauses in the leave and license agreement.
1. Possession: In most of the agreements it is suggested that possession of the property during the entire term of the agreement shall remain with Licensor. However, the agreement should clearly specify that there is no intention of the licensor to transfer any right or interest in the property per se and the right been granted is an Exclusive Right.
2. Lock in period: Both licensor and licensee shall be locked in for a certain term of license agreement (for some Years or so). The license is always terminable at will of the party. By granting a license, Licensor is merely granting a permissive or exclusive right to licensee and not the property itself.
3. Possession is Exclusive: The agreement should clearly state that licensor is granting, and licensee is entitled to exclusive license for the property. It must be clear that there is distinction between exclusive license and exclusive possession.
4. Notice: The Licensor should give notice to licensee while revoking the license. The Law does not bar any of the parties to agree to a certain form of notice to be given by licensor to licensee before any kind of revocation of license by the licensee. If such terms are agreed, it would be an obligation on the part of licensor to do so.
5. Keys and Locks with the Licensor: In some agreement it is written that the keys and locks of the premises shall be with licensor for all purposes. This again reinforces the fact that licensor has granted merely exclusive rights to the licensee.
Termination of the Leave and License Agreement
The Termination of the agreement can be done by providing the prior notice to the licensee according to the clause in your rental agreement.
If both the parties by mutual consent agree to terminate the same at any time it can also be done.
Apart from these, the Licensor may also put some clause stating that the premises are to be maintained in a proper manner, yearly increment of rent, Security amount, Rent and Tenure of Agreement and penalize the Licensee if any furnishing or fixture is found out of order. The penalty could be credited from the security or it could be over and above the security amount depending on the loss incurred to the party.