Difference between Lease and License Agreement

  •  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.
  • Lease creates interest on the leased property in favour of the lessee. In License no such interest is created in the Licensee.
  • • Lease interest can be assigned. License is not assignable.
  • • Denial of Lessor’s title results in forfeiture of lease. It is not so on a License.
  • • 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.
  • • Termination of lease requires notice to be served on the lessee. Termination of License can be done without notice.
  • • 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 real estate License agreement registration was not compulsory. However according to recent amendment in Maharashtra, stamp duty and registration is made compulsory.
  • • A Lessee can sue stranger or third party in his own name. A Licensee cannot do so. Hence it can be constructed from the above that under terms of agreement in respect to land and building for commercial purpose, exclusive possession is not given, and there is a covenant for delivery of vacant possession after expiry of the terms of agreement, the agreement would be a License and not a lease. Hence the cardinal distinction between a lease and License is that in the former there is a transfer of interest of the immovable property to enjoy, whereas on the latter case there is no transfer of interest on immovable property at all.
  • License only acquires a right to occupy 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 or tenant respectively. Source: Maharashtra Societies Welfare Association

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