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Ask for a "rent agreement" in Mumbai and you'll be handed a leave and license agreement instead. The two documents put the same people in the same flat for the same money — but they create fundamentally different legal relationships, and the difference is entirely in the landlord's favour. Understanding it takes five minutes and explains half of Indian rental practice.
Lease vs license: the legal core
A lease transfers an interest in the property — the tenant gets exclusive possession and rights that survive even a sale of the property. Old tenancy laws gave leased tenants formidable protections, which is precisely why landlords fear the word.
A license (under the Indian Easements Act, Section 52) grants only permission to use the premises. No interest in property transfers. The licensee is, legally, a permitted occupant — closer to a long-stay guest than a tenant. Evicting an overstaying licensee is dramatically simpler than evicting a tenant.
"Leave and license" = the landlord grants license to occupy, and the licensee agrees to leave on expiry. The structure exists to keep tenancy law out of the relationship.
What the format contains
Largely parallel to a rent agreement, with vocabulary and a few clauses doing legal work:
- Parties — Licensor (owner) and Licensee (occupant) — never "landlord/tenant"; courts read labels
- Premises description and permitted use
- Term — commonly 11, 22, 33 or 36 months in Maharashtra (registration is required regardless — see below)
- License fee — not "rent"; amount, due date, escalation
- Deposit — refundable, with timeline and deduction conditions
- The no-tenancy clause — the heart of the document: "Nothing herein creates any tenancy, sub-tenancy or interest in the premises in favour of the Licensee; possession remains with the Licensor."
- Licensor's access — the owner retains keys/control in principle
- No sub-licensing, termination, notice, and dispute clauses
- Signatures + two witnesses
Registration: Maharashtra's special rule
Here's where leave and license differs sharply from the 11-month rent-agreement dodge: in Maharashtra, every leave and license agreement must be registered, whatever its duration — Section 55 of the Maharashtra Rent Control Act puts that duty on the landlord, with penalties for default. The state built a fully online system for it: e-registration with Aadhaar-based biometric verification, done from home, no sub-registrar visit.
Costs (Maharashtra, indicative): stamp duty at 0.25% of (total license fees + non-refundable deposit + interest component on refundable deposit) for the term, plus registration fee (₹1,000 urban). For a ₹30,000/month, 11-month agreement, you're typically looking at around ₹1,000–1,500 in duty plus fees — small money for an enforceable document. Police verification of the licensee (a Mumbai-specific compliance) is also expected of landlords.
Outside Maharashtra, leave and license is used more selectively — PGs, serviced offices, co-working — and registration follows the general 12-month rule for the relevant instrument.
Which should you sign?
As an occupant (flat or business space): the license structure gives you fewer rights — that's its purpose. It's fine for ordinary tenancies; be more careful when you're investing in the space. Fitting out a salon or studio on an 11-month license means your ₹5 lakh interior rides on renewal goodwill. Negotiate a longer term, renewal options in writing, or a proper lease.
As an owner licensing out space: leave and license is almost always your structure — easier exit, no tenancy claims, and in Maharashtra it's the standard instrument anyway.
Freelancers and small businesses meet this document constantly: co-working seats, salon chair arrangements, shared studios, shop-in-shop counters are all licenses in substance. Read the exit and deposit clauses hardest — those are the two that get used.
Practical checklist
- Correct vocabulary throughout (licensor/licensee/license fee)
- No-tenancy clause present
- Deposit refund timeline specified
- Registered (mandatory in Maharashtra; advisable elsewhere for long terms)
- Business use, signage and alterations spelled out if commercial
- TDS/GST treated as in any commercial rental
- Digital copy archived
Agreements are half of business paperwork; the other half is the money trail — license fees paid, deposits held, receipts issued. Keep both organised. For the client-facing side of your business — contracts, invoices, payments — BrightDesk keeps everything in one place, with ready contract templates and a free invoice generator to match.