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The legal definition
Licence is defined under Section 52 of the Indian Easements Act, 1882.
"Where one person grants to another, or to a specific number of other persons, a right to do, or to continue doing, in or upon the immovable property of the grantor, something which, in the absence of such right, would be unlawful, and such right does not amount to an easement or an interest in the property, the right is known as a license."
Lease is defined under Section 105 of the Transfer of Property Act, 1882.
"A transfer of the right to use immovable property for a predetermined period of time, whether express or implied, or for perpetuity is known as a lease."
The difference
The above-mentioned definitions indicate towards the wide difference between the two terms on various parameters.
Ownership and possession:
A landlord grants a tenant, by the execution of a lease, a right to use his property for the duration of the rental agreement.
However, when a landlord grants a renter a licence to occupy his property, he only retains that position and does not transfer any ownership interests.
So why should a licence be issued at all if the landlord's rights remain unaltered?
According to the law, if a licence is not granted providing the tenant the right to do so, using another's property would be illegal.
A licence contract is made between two parties when property owners let their properties to be utilised as banquet halls or community halls, for example.
Since no ownership is changed, if a licence agreement is broken, the tenant may be entitled to legal damages. However, in the event of a default, the landlord would be required to follow the guidelines outlined in the rental agreement. A licence agreement differs from a lease in that the landlord keeps ownership of the property.
Time limit: A lease could be signed for a duration that varies greatly, from 11 months to perpetuity. After the activity for which the space was hired is completed, the licence agreement expires.
Continuance: A licence is a private agreement.
This indicates that if either party passes away, it ends immediately.
A lease is not the same, though.
If the landlord passes away, the new owner will be obligated by law to uphold the lease.
This also functions in reverse.
If the tenant passes away, his heir may stay in the property until the rent agreement's term is up.
Before ending a lease, the landlord must also serve the tenant with a notice.
In the case of a licence agreement, this is not necessary.
Transfer:
Licenses cannot be transferred to third parties or legal successors, although a lease can.
Similar to this, even if the property has a new owner, the tenants' rights are still valid.
In the case of licence agreements, this regulation does not apply.
Revocation:
When the rent agreement's term expires, the lease is revoked.
The landlord may terminate a licence agreement whenever they see fit.
Monetary compensation:
A lease will almost always involve financial exchange between the parties.
A licence agreement does not operate in the same way.
Eviction:
According to the Model Tenancy Law, the landlord must request permission from the rent authority before evicting tenants.
Since the tenant does not possess the property, this need does not exist under license agreements.
This makes it clear that while all arrangements to rent your propertyfor particular events or ceremonies are licencing agreements, all rent agreements must be leases.
However, unless terms and conditions are added to the document expressing the same, they won't become that on their own.
When signing a lease, a tenant must be aware of all of his rights.
In a similar vein, the landlord must exercise caution when establishing the terms and conditions of a licence agreement.
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