In India, renting property is a common practice, and people often enter into lease or leave and license agreements. A leave & licence agreement is a written contract between the property owner and the tenant, in which the owner grants the tenant the right to use the property for a specified period in exchange for rent. It is a legal document that outlines the terms and conditions of the lease, including rent, security deposit, maintenance, and other relevant clauses.

One of the common questions that arise in the minds of people is whether it is compulsory to register leave and license agreements in India. In this article, we will explore the legal requirements related to registration of leave and license agreements in India.li

What is a Leave and License Agreement?

A leave and license agreement is a legal document that outlines the terms and conditions of the lease of the property. It is a written agreement between the landlord or owner of the property and the tenant. The agreement grants the tenant a license to use the property for a specified period, usually 11 months, in exchange for rent.

The leave & license agreement contains all the essential clauses such as the rent payable, security deposit, period of the license, maintenance charges, and other relevant clauses. The agreement also includes details about the rights and obligations of the tenant and the landlord.

Related – how to Register an Online Rent Agreement in India

Is Registration of Leave and License Agreement Mandatory in India?

The Registration Act, 1908, mandates the registration of specific documents that create, declare, assign, limit or extinguish any right, title or interest in an immovable property. However, the Act exempts certain types of documents from mandatory registration, including leave and license agreements for a period of up to 11 months.

Therefore, registration of leave and license agreement is not mandatory in India if the period of the agreement is less than 11 months. However, if the term of the agreement exceeds 11 months, the agreement must be registered with the Sub-Registrar of Assurances in the concerned jurisdiction.

Benefits of Registering Leave and License Agreement

While it is not mandatory to register leave and license agreements for a period of up to 11 months, it is still advisable to register the agreement. The registration of leave and license agreements provides several benefits to both the landlord and the tenant, including:

1. Legal Validity: A registered leave and license agreement is legally valid and enforceable in court. In case of any disputes or legal issues, a registered agreement can be produced as evidence in court.
2. Protection of Rights: Registration of leave and license agreements helps to protect the rights of both parties. The agreement clearly outlines the terms and conditions of the lease, which helps to avoid any confusion or misunderstandings in the future.
3. Proof of Ownership: A registered leave and license agreement serves as proof of ownership of the property. It helps to prevent any fraudulent or illegal activities related to the property.
4. Better Credit Score: A registered agreement can help tenants to improve their credit score as it shows a record of timely rent payments and a history of responsible behaviour.
5. Stamp Duty Payment: If the agreement is not registered, it is still essential to pay stamp duty on the agreement. Registration of the agreement serves as proof of payment of stamp duty.

How to Register a Leave and License Agreement in India

To register a leave and license agreement, the following steps must be followed:

1. Prepare the Agreement: The agreement must be prepared on a stamp paper of appropriate value as per the stamp duty rates applicable in the concerned jurisdiction.
2. Obtain Signatures: Both parties, i.e., the landlord and the tenant, must sign the agreement in the presence of two witnesses.
3. Submit Documents: The following documents must be submitted to the Sub-Registrar of Assurances for registration:

1. Original agreement signed by both parties
2. Identity proof of both parties (such as Aadhaar Card, PAN Card, etc.)
3. Property documents, such as sale deed, title deed, or tax receipt
4. Proof of payment of stamp duty

4. Pay Registration Fees: The registration fees must be paid, which is generally 1% of the total rent for the entire period of the agreement.
5. Verification and Registration: The Sub-Registrar of Assurances will verify the documents and then register the agreement. The registration process usually takes 2-3 days, and the registered agreement will be returned to both parties.

Conclusion

In conclusion, while it is not mandatory to register leave & licence agreements in India for a period of up to 11 months, it is advisable to do so. Registration of the agreement provides legal validity, protects the rights of both parties, serves as proof of ownership, and helps to improve the credit score of the tenant. To register a leave and license agreement, the agreement must be prepared on a stamp paper, signed by both parties, and submitted to the Sub-Registrar of Assurances along with the required documents and registration fees. The registration process is simple and helps to avoid any future legal disputes or misunderstandings.

Posted by Surya