Lawsikho Blog

This article will walk you through all aspects of leave and license agreements, from their core concepts to the key components and a practical drafting process.  Whether you are a law student or someone looking to understand how to draft a leave and license agreement, this guide is for you.

Introduction

It was last May when I was preparing notes of arguments in a complex matter, when my assistant came into my cabin and informed me that a client had walked in.

I told my assistant to make him wait for a while as I finished my notes.

After a few minutes, I invited him into my cabin and offered him tea. 

I am Varun Kumar, he said. I run a textile export business. But I am not here for that. I needed help with my house, and he started narrating his story.

He said he met Karan Mehta in January 2024, who needed a place to stay. He seemed reliable and expressed interest in his 900 sq ft. apartment. 

He offered him an 11 month arrangement at Rs. 60,000/- per month.

“We can keep this simple,” he remembered telling him. 

“Gentleman to gentleman.” We shook hands, and he handed over the keys, confident in our verbal understanding that he would vacate promptly in December 2024.

Now it is May 2025, and not only is Karan still living in my apartment, but he has also moved in his friend Mayank Sharma. 

When he politely reminded him of our agreement, his demeanor changed completely.

“Show me the document that says I am just a licensee,” Karan said.

He was stunned. He and his wife had planned to move back into their house after their son’s wedding, and now they are compelled to live with relatives while a stranger is living at their home.

Now he is looking for legal options to get back his house.

I told him this happens far too often and advised him never to enter into such an oral arrangement.

I informed him that a leave and license agreement could have saved him, because the law provides a special and speedy remedy in such cases.

However, since there is no leave and license agreement executed in your case, we will have to file a suit against the illegal occupancy, which might take some time. But I assured him that we will get back the house at the earliest.

He seemed relieved and asked me to proceed with the suit, and at the same time, understood the importance of a leave and license agreement. 

So today, I will teach how to draft a leave and license agreement. 

But before that, let us understand the basics first.

What is a leave and license agreement?

A leave and license agreement is an agreement in which the owner of the property, known as the licensor, grants permission to another person, called the licensee, for the purpose of using the property belonging to the licensor for a specified period without actually transferring any interest in the property in favour of the licensee.

The licensee agrees to pay a license fee (not rent) for and a security deposit that has to be refunded upon vacating the premises

The legal original of this agreement comes from section 52 of the Indian Easements Act, 1882, which defines a license, as a right that is granted by one person to another for the purpose of doing something upon the property of the grantor, which would otherwise be unlawful in the absence of such a right.

A leave and license agreement has the following characteristics that you should know:

1. It creates a personal right in favour of the licensee for the purpose of using the property
2. It does not create any interest in favour of the licensee in respect of the property
3. It is generally revocable by the licensor after giving proper notice thereof to the licensee 
4. It is made for a limited time period
5. It permits the licensee to occupy the property without transferring or conferring any possessory rights upon the licensee.

You must also know the purpose of a leave and license agreement. I will discuss that below.

What is the purpose of a leave and license agreement?

A leave and license agreement has many purposes.

The primary purpose is that the agreement protect the licensor and the licensee to safeguard their interest.

The next is that the agreement specifies the terms and conditions that both the licensor and the licensee must comply with.

The agreement also helps in the eviction of the licensee as per the terms mentioned in the agreement.

It also prevents the creation of tenancy rights.

Now that we have understood the purpose, it is equally important to understand the difference between a leave and license agreement and a lease deed.

What is the difference between a lease deed and a leave and license agreement?

I have prepared a table to show the difference between the two documents.

Aspect	Lease deed	Leave and License Agreement
Governing law	A lease is governed by section 105 of the Transfer of Property Act, 1882.	In Maharashtra, the Maharashtra Rent Control Act, 1999, is the primary governing law for leave and license agreements, with section 52 of the Indian Easements Act providing the foundational definition of a license.
Parties involved	The parties to a lease are known as the lessor (the owner) and the lessee (the tenant).	The parties involved are the licensor (the owner) and the licensee (the person granted permission to use the premises).
Nature of rights	A lease creates an interest in the property in favour of the lessee.	A leave and license agreement does not create any interest in the property. It only grants a personal right to use it temporarily.
Effect of sale to a third party	Even if the property is sold to a third party, the lessee’s rights continue and are protected under law.	The license automatically ends if the property is sold unless the new owner agrees to continue it.
Possession	The lessee generally enjoys exclusive possession and control over the property during the lease term.	The licensee has no right to exclusive possession, and the control of the property remains with the licensor.
Transferability	The rights conferred upon the lessee are transferable and inheritable. However, the lease deed can restrict the same.	The rights conferred upon the licensee under a leave and license agreement are non-transferable and non-inheritable.

Let us now move on to understand how to draft a leave and license agreement, but before that, we will look at the essential clauses of the agreement.

What are the essential clauses of a leave and license agreement?

1. Details of the parties
   You need to mention the details of the parties to the agreement, viz, their names, ages, and addresses for the purpose of identification.

2. Description of the licensed premises
   The agreement must specify the proper description of the premises which is given on a leave and license basis, to prevent any dispute regarding the area in the future.

3. Purpose of the license
   The agreement shall also mention that the premises are given for either residential, commercial, or other purposes.

4. Duration of license
   It is necessary that the agreement mentions the duration of the license, including the commencement date, to avoid any misunderstanding regarding the same.
   
5. License fee and security deposit
   The agreement shall specify the license fee and security deposit, payment terms, and refund conditions.

6. No tenancy rights
   The agreement shall explicitly state that no tenancy rights are created. 

7. Permission for a third party
   The agreement shall specify that no third party shall be entitled to reside in the premises, and the Licensee shall be responsible for ensuring compliance thereof.

8. Utility payments and outgoings
   The agreement shall specify the responsibilities of the parties in the agreement to bear the utility charges and the outgoings.

9. Termination and lock-in period
   The agreement shall specify termination conditions and any lock-in period. 

10. Surrender on termination
    The agreement clearly set out that the licensee shall vacate the premises upon termination of the agreement.

11. Registration and stamp duty
    The agreement must clearly mention who shall bear the stamp duty and registration charges in case the registration of the agreement is mandated under law.

12. Dispute resolution and jurisdiction
    The agreement must contain a dispute resolution mechanism to resolve the disputes between the parties and also mention the jurisdiction of the authority or Court that would decide the dispute between the parties to the agreement.
                                           

Now, let us learn how to draft one

How do you draft a leave and license agreement?

I will take the following example for the purpose of teaching how to draft a leave and license agreement.

Example: 

Sunita Rao is a 55-year-old woman who owns a furnished 2BHK flat in Worli, Mumbai. Vikram Mehta is a 32-year-old man who has relocated to Mumbai for work and needs a flat. Sunita has agreed to give her flat to Vikram on a leave and license basis for 11 months, and Sunita has also allowed Arjun Sharma (a friend of Vikram) to reside in the flat with Vikram.

LEAVE AND LICENSE AGREEMENT

Explanation: The opening sentence identifies the document as a Leave and License Agreement that specifies the date and place of execution of the agreement. It introduces the parties with their basic details for proper identification.

THIS AGREEMENT OF LEAVE AND LICENSE (hereinafter referred to as “Agreement”) made at Mumbai this 1st day of May 2025.

BETWEEN

MRS. SUNITA RAO, Indian Citizen aged around 55 years, currently residing at Flat No. 707, Nestle Building, Pandurang Budhkar Marg, Worli, Mumbai-400013 (hereinafter referred to as “the LICENSOR” (which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include her heirs, executors, administrators, successors and assigns) of the ONE PART;

AND

MR. VIKRAM MEHTA, Indian Citizen aged around 32 years, having address at Flat No. 102, Sea Breeze, Juhu, Mumbai-400049 hereinafter referred to as “the LICENSEE” (which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include his heirs, executors, administrators, successors and assigns) of the SECOND PART.

Explanation: These clauses are called recitals that begin with “Whereas” and set out the context and intent of the agreement. 

Clause A confirms the ownership of the Licensor in respect of the flat.

Clause B talks about the request of the Licensee to use the flat for residential purposes for a certain duration on the terms and conditions mentioned in the agreement.

Clause C states that the Licensor has agreed to grant the license to use the flat to the Licensee on the terms and conditions mentioned in the agreement.

In short, it lays down the background and purpose for which the parties have agreed to enter into this agreement.

WHEREAS:

A. The Licensor is absolutely seized and possessed of and is the lawful owner entitled to the premises being residential Flat No. 707 admeasuring 900 sq ft., located on the 7th Floor of Nestle Building, Pandurang Budhkar Marg, Worli, Mumbai-400013 (hereinafter referred to as the “Licensed Premises”)

B. The Licensee has requested the Licensor to allow the Licensee to use and occupy the Licensed Premises on leave and license basis with effect from 1st May 2025 (hereinafter referred to as “the Effective Date”) for a period of 11 months (hereinafter referred to as “the Term”) at the license fee and on the terms, conditions and covenants as are hereinafter contained for a limited period and only for the purpose of bonafide residence of the Licensee.

C. The Licensor has agreed to allow the Licensee and the Licensee has agreed to use and occupy the Licensed Premises strictly on the terms and conditions set out hereafter.

Explanation: Operative clauses 

This marks the start of the binding operative clauses covering critical aspects like license grant, fees, security deposit, and termination, etc. that form the core of the agreement.

NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED AND CONFIRMED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:

Explanation: Clause 1 (No tenancy rights)
This clause declares that the agreement does not create tenancy rights for the Licensee, his family, or his friend. The purpose of this clause is to prevent them from claiming tenancy rights, which could grant them better legal protection under rent control laws. With this clause, the Licensor safeguards herself from reclaiming the flat and demonstrates that the agreement was executed for a temporary period only.

1. The Parties hereby declare, record and confirm that nothing herein contained nor the permission for Leave and License herein referred to nor the use and occupation of the Licensed Premises will create any rights in the nature of tenancy or similar rights, in favour of the Licensee, his family members and his friend Mr. Arjun Sharma or any one or more of them and that neither the Licensee nor any one on its behalf nor any of the persons aforesaid will at any time contend that any tenancy rights or any similar rights have come into existence in favour of the Licensee or any of the person aforesaid or any one or more of them.

Explanation: Clause 2 (Grant of license and license fee)
This grants Licensee a non-exclusive and non-transferable license to use the flat for residential purposes for a particular time period and a license fee. If the period is longer, there can also be escalations in the licensee. You can draft the clause in the following manner: “The license fee shall increase by 5% upon renewal of the agreement”.

2. In consideration of the license fee herein reserved and contained and relying on the representations made by the Licensee and believing the same to be true the Licensor does hereby grant a BARE, NON-EXCLUSIVE, NON-TRANSFERABLE, NON-ASSIGNABLE, NON-HERITABLE license to the Licensee to use and occupy the Licensed Premises for the purpose of the bonafide residence of the Licensee for the term commencing from 1st May 2025 and expiring on 31st March 2026 upon the terms and conditions hereinafter contained. The License fee for the occupation of the Licensed Premises is fixed at Rs. 60,000/- (Rupees Sixty Thousand Only) per month payable in advance on or before the 5th day of every month for which it is due. The license fee shall be inclusive of all presently payable outgoings, charges, taxes, fees, duties or levies of any nature whatsoever (if any).

Explanation: Clause 3 (Permission for Third Party)
This allows Licensee to let his friend reside in the flat, holding Licensee responsible for the actions of his friend. It protects the Licensor from damages or breaches by the friend of the Licensee.

3. The parties hereto hereby agree that the Licensee shall be entitled to allow Mr. Arjun Sharma to use and occupy the licensed premises along with him. However, all the obligations and covenants herein shall be complied by the Licensee only provided however that the Licensee shall be fully responsible for all acts, deeds and things done by the said Mr. Arjun Sharma in respect of the licensed premises and any loss and damages that may be suffered by the Licensor in relation to the said licensed premises. The Licensee shall be liable for such loss and damages and shall be bound to reimburse the same to the Licensor.

Explanation: Clause 4 (Security deposit)
This clause states that the Licensee shall pay a security deposit to the Licensor, which shall be refunded upon expiry or sooner determination of the agreement. The security deposit shall not carry any interest. The security deposit acts as a financial safeguard for the Licensor, which can be adjusted against pending dues of the Licensee.

4. The Licensee has deposited with the Licensor an interest-free sum of Rs. 1,80,000/- (Rupees One Lakh Eighty Thousand Only) (by cheque no. 123456 dated 25th April 2025, drawn on HDFC Bank, Worli Branch) which shall continue as a security deposit (hereinafter referred to as the “Security Deposit”) for the due observance, performance and compliance by the Licensee of the terms, conditions and covenants of the said Leave and License Agreement. It is expressly agreed by and between the parties hereto that the said sum of Rs. 1,80,000/- (Rupees One Lakh Eighty Thousand Only) shall not carry any interest and the same shall, subject to such deductions therefrom as may be permissible hereunder, be refunded to the Licensee on the expiry or sooner determination of the Leave and License Agreement in accordance with the terms and conditions herein contained.

Explanation: Clause 5 (Refund of security deposit)
This clause ensures that the Licensor must refund the deposit after deducting unpaid fees or utility bills upon termination of the agreement. This ensures that the process for settling the financial obligations of the parties at the termination of the agreement is clearly specified to protect the rights and interests of both parties.

5. The said Security Deposit shall be refunded by the Licensor immediately after the expiry or sooner determination of the Agreement after adjusting/deducting the outstanding dues on any unpaid license fee, electricity bills and telephone bills (actually consumed by the Licensee during the period of its occupation in the Licensed Premises), the receipt for the same shall be given to the Licensee. The deficit, if any, after adjusting all such outstanding amounts against the Security Deposit shall be paid by the Licensee forthwith and the Licensee shall indemnify and keep the Licensor indemnified against all such costs, charges, levies or dues outstanding under this Agreement for payment thereof.

Explanation: Clause 6 (Conditions for refund of the deposit)
This clause ensures that the Licensee cannot claim the security deposit until the flat is vacated and handed over to the Licensee. This protects the Licensor from premature claims and ensures that the Licensee complies with their obligation to follow the termination process.

6. The LICENSEE shall not under any circumstances be entitled to demand the said Security Deposit or any part or parts thereof or the balance thereof from the LICENSOR unless and until the LICENSEE, his family members and his friend Mr. Arjun Sharma from the Licensed Premises and handed over to the LICENSOR quiet, vacant and peaceful charge thereof, the intention of the parties being that the said Security Deposit or the balance thereof after making the aforesaid deductions shall be returned by the LICENSOR to the LICENSEE without interest simultaneously on the LICENSEE handing over quiet, vacant and peaceful charge of the licensed premises to the LICENSOR.

Explanation: Clause 7 (Use of furniture)
The Licensor allows Licensee to use the furniture which is mentioned in Annexure A at no extra cost. The purpose of this clause is to avoid disputes over ownership or additional charges for the furnitures in the flat.

7. The Licensor would allow the Licensee to use the Furniture as mentioned in Annexure A at no extra cost.

Explanation: Clause 8 (Residential use and conduct)
This clause confirms that the flat is restricted to residential use by the Licensee, his family, and friend. It prohibits any nuisances to the other occupants or damage to the flat. The purpose of this clause is to maintain the condition of the flat and ensure harmonious coexistence within the building.

8. The LICENSEE shall use and occupy the Licensed Premises only for the bonafide residence of the LICENSEE, his family members and his friend Mr. Arjun Sharma and the LICENSEE and his friend shall take due care and caution and shall not do or cause anything to be a nuisance or annoyance to the other occupants of the said building or which can cause any damage to the Licensed premises or any part thereof.

Explanation: Clause 9 (Licensor’s obligation to pay outgoings)
This clause mentions that the property taxes, municipal taxes, and society charges shall be borne by the Licensor, which is a standard practice in Mumbai, especially. The purpose is to clarify the financial responsibilities of the parties to prevent any disputes between the parties and also to reflect the local market norms.

9. The LICENSOR shall pay and bear all the outgoings and maintenance expenses, including property tax, cess, municipal taxes, car parking charges, ground rent, society charges, present as well as future and any increase therein.

Explanation: Clause 10 (Licensee’s obligation to bear  utility charges)
This clause specifies that the Licensee must bear the utility charges. The purpose is to ensure that the person using the utilities is responsible for bearing the cost for the same, thereby protecting the Licensor from such expenses.

10. In addition to the payment of the license fee, the LICENSEE, in relation to the Licensed Premises, hereby absolutely and unconditionally agrees to bear and forthwith pay to the LICENSOR or the appropriate authorities as may be determined by the LICENSOR from time to time all the ACTUAL payments for gas and electricity consumed by the LICENSEE in respect of the Licensed premises and all the meter charges as recorded on the separate meter or meters pertaining to the Licensed premises.

Explanation: Clause 11 (Lock-in period)
This clause sets out a 6-month lock-in that prevents early termination by Licensee and lays down the conditions in respect thereof. After the lock-in period is completed, the agreement can be terminated after giving a 30-day notice and after the notice period has expired, the Licensor must refund the security deposit to the Licensee and the Licensee must vacate the flat. The purpose is to balance the need of the Licensor for fixed and assured income along with the right of the Licensee to vacate after a reasonable period.

11. The LICENSEE hereto shall not be entitled to terminate this Agreement during the initial lock-in-period of 6 months, except as otherwise provided in this Agreement. The LICENSEE hereto shall be entitled to put an end to this Leave & License Agreement at any time, after completion of first 6 months, without assigning any reasons whatsoever but only after giving a minimum of 30 days prior notice in writing to the LICENSOR. On expiry of the said period, the LICENSEE shall forthwith, on the LICENSOR simultaneously refunding the Security Deposit to the LICENSEE (subject however to permissible deductions as permitted under this agreement), remove themselves, their belongings etc from the Licensed premises and hand over the set of duplicate keys to the LICENSOR. In the event of the Licensee deciding to vacate the premises during the lock-in period the Licensee shall be bound and liable to pay License fees for the entire lock-in period of 6 months.

Explanation: Clause 12 (Breach and termination)
The first part of the clause allows the Licensor to terminate the agreement after a 1-month notice in case of any breach of the agreement on the part of the Licensee. The second part of the clause permits the Licensee to terminate the agreement after a 1-month notice in case of any breach of the agreement on the part of the Licensee. The purpose of this clause is to ensure accountability so that both parties have the opportunity to remedy the breach complained of, and if the same is not done, both parties have the right to terminate the agreement.

12. (a) In the event of the LICENSEE committing a breach of any of the terms and conditions of this Agreement, the LICENSOR is entitled to serve upon the LICENSEE a notice in writing specifying therein the breach. In the event of the breach or objection complained of in such notice not being substantially remedied by the LICENSEE within the said period of one month, this License shall automatically stand terminated, without prejudice to the other rights and remedies of the LICENSOR.

(b) Similarly, in the event of the LICENSOR committing any breach of the terms and conditions herein contained and failing within 1 (one) month to remedy or make good such breach on receipt of notice in writing from the LICENSEE, the LICENSEE shall be entitled to revoke and/or terminate this Agreement forthwith and the LICENSOR shall immediately refund the said security deposit to the LICENSEE.

Explanation: Clause 13 (Surrender on termination)
This clause ensures that the Licensee, his family and his friend must vacate the flat upon termination, determination, or revocation of the Licensee and the Licensor must refund the security deposit. This ensures that the right to reclaim the property is protected by withholding the security deposit until the flat is vacated.

13. Upon the termination, sooner determination or revocation of this license the LICENSEE shall forthwith and unconditionally surrender to the LICENSOR physical charge of the Licensed premises received by him for the purpose of this license on the LICENSOR simultaneously refunding the Security Deposit to the Licensee (subject however to permissible deductions as permitted under this agreement) and in which event the LICENSEE, his family members and his friend Mr. Arjun Sharma shall cease to occupy the Licensed Premises and remove themselves, their belongings and articles therefrom and shall have no right whatsoever to enter the licensed premise or any part thereof or to do any of the function which it was permitted to carry out by virtue of this license before its termination or for any other purpose whatsoever.

Explanation: Clause 14 (Consequences of non-surrender)
This clause specifies the consequences of not vacating the flat after termination, determination, or revocation of the licensee. The purpose of this clause is to deter the Licensee from residing in the flat beyond the agreed period, and by treating them as trespassers, the right of the Licensor to reclaim the flat is strengthened. 

14. Except otherwise agreed by the parties, upon the termination, sooner determination or revocation of this license as provided for in this Agreement, if the Licensee, his family members and his friend Mr. Arjun Sharma do not forthwith and unconditionally surrender to the Licensor, its physical charge of the Licensed Premises, on the Licensor simultaneously refunding the Security Deposit to the Licensee, the Licensor shall be entitled to remove from the Licensed Premises and/or to bar the entry of the Licensee, his family members and his friend Mr. Arjun Sharma which the Licensee hereby unconditionally and irrevocably authorizes the Licensor to do so, and this right of the Licensor shall be without prejudice to all her other legal rights and remedies in the matter. In such event the Licensee or any of the persons aforesaid entering upon the Licensed Premises will amount to trespass and the Licensor shall have the right to take all steps, including approaching the competent authority to obtain an order of eviction against the Licensee or any of the persons entering the Licensed premises. The Licensee hereby agrees not to obstruct the eviction process.

Explanation: Clause 15 (Trespass and disposal)
The clause states that the Licensee and his friend shall not enter or trespass after the termination of the agreement. The Licensor shall have the right to dispose of the furniture lying inside the flat without being liable for damages. The purpose of this clause is to ensure that the Licensee completely understands the risk of non-compliance after termination of the agreement.

15. The Licensee agrees and undertakes for himself and his friend aforesaid not to enter or trespass after termination of the Term, even if the Licensee is contesting the validity of such termination. The Licensor shall also be entitled, in her sole, absolute and unfettered discretion, to dispose of the furniture, fixtures, fittings, goods, equipment and chattels of the Licensee lying in any manner whatsoever within 15 days of receiving written notice from the Licensor, in accordance with applicable law, after providing the Licensee an opportunity to retrieve them. The Licensee hereby irrevocably and unconditionally authorizes the Licensor to dispose of such furniture, fittings, goods, equipments, and chattels in the above manner without being liable for any loss caused to the Licensee as a result of such disposal. It is also realized, appreciated, agreed and clearly understood by the Licensee that if he so fails to surrender physical occupation/charge as aforesaid, irreparable harm and injury would be caused to the Licensor on a continuous basis for which the Licensor must and shall be compensated OVER AND ABOVE AND WITHOUT PREJUDICE to any rights, remedies and compensations available and permitted to the Licensor under the law or statute. This is without prejudice to all the other rights and remedies available to the Licensor in law.

Explanation: Clause 16 (Inspection rights and repairs)
This clause allows the Licensor to visit and inspect the flat and also to carry out repairs with 48 hours’ notice (via registered post or email). The purpose of this clause is to allow the Licensor to monitor and maintain the premises in order to ensure that the condition of the flat is good and that no illegal activities are being carried out in the said flat.

16. With a view to check the Licensed Premises, the water tanks, etc the LICENSOR shall be entitled to visit and inspect the licensed premise or any part thereof at any time and to carry out repairs if necessary, through himself or any of her authorized representatives by giving adequate notice (which shall not be more than 48 hours) and the Licensee shall not hinder or obstruct any such visitor from visiting the Licensed Premises or any part thereof.

Explanation: Clause 17 (Non-transferability)
This clause confirms that the Licensee cannot transfer or assign the license to any other person. The purpose of this clause is to prevent any third party from using the premises and to protect the Licensor from any third party liabilities.

17. The LICENSEE shall not, under any circumstance whatsoever, transfer or assign, in any manner whatsoever, wholly and partly, whether directly or indirectly any benefit of this license to any person whomsoever or create any third party rights therein of whatsoever nature.

Explanation: Clause 18 (Jurisdiction)
This clause specifies that the disputes are governed by certain provisions of the Maharashtra Rent Control Act, 1999, with exclusive jurisdiction of the Competent Authority. Therefore, depending on your State’s rent laws, you can modify this clause. The purpose is to specify the laws and authority to govern the dispute, to leave no room for prolonged litigation in other courts.

18. Without prejudice to the foregoing provisions and without prejudice to any other rights or remedies which may be available to the LICENSOR in pursuance of this Agreement, the LICENSEE agrees that this Agreement is governed by Section 3 (1) (b) and Section 24 read with Section 40 and 43 of the Maharashtra Rent Control Act 1999 and the Competent authority appointed under Section 40 of the aforesaid Act shall have exclusive jurisdiction and that no other court has any jurisdiction to entertain any matter arising out of this Agreement and arrangement.

Explanation: Clause 19 (Automatic revocation)
This clause lays down circumstances in which the license shall be automatically revoked. The purpose of this clause is to protect the Licensor from any financial, legal, or other risk that can impact the performance of this agreement. 

19. In addition to the right, in law, of the LICENSOR to revoke this it is expressly provided that this License shall stand automatically revoked forthwith upon the happening of any of the following events and without giving any further notice or necessitating the execution of any further documents or writings of any nature whatsoever:- i) The LICENSEE is declared insolvent or commits any act of insolvency or if any attachment or distress proceedings are commenced in respect of any assets of the LICENSEE. ii) As soon as any bill is passed by the Union or State Legislature or if any ordinance is promulgated prohibiting or restricting in any manner whatsoever any leave and license agreement or arrangement or conferring any rights upon the LICENSEE or making any change whatsoever in the status of the LICENSEE. It is expressly clarified that this License shall stand automatically forthwith revoked upon the mere passing of such a bill by the Legislature and/or promulgation of such an ordinance and one day prior to the assent of the President or the Governor, as the case may be, is obtained to such bill or legislation.

Explanation: Clause 20 (Storage of hazardous materials and carrying out illegal activities)
This clause specifies that the Licensee cannot store hazardous materials and cannot carry out illegal activities at the flat. The purpose is to protect the Licensor from any  financial, legal, or other problems and also to ensure the flat is used in accordance with the terms of this agreement. 

20. The LICENSEE shall not store any hazardous or inflammable articles except cooking gas, cylinders in the Licensed Premises nor shall the LICENSEE carry out any illegal or immoral activity or any acts banned by Government and/or by any competent authorities and shall not use the Licensed Premises as a guest house at any time.

Explanation: Clause 21 (Stamp duty and registration)
This clause mentions that the stamp duty and registration fees shall be paid equally between the parties, and the document will be registered. The purpose is to formalise the agreement and to make it enforceable in nature.

21. The Agreement shall be registered by the LICENSOR and the LICENSEE as per the provisions of the Maharashtra Rent Control Act. The stamp duty and registration fees, if any, in respect of this Agreement and the duplicate thereof in respect thereof shall be borne equally by LICENSEE and the LICENSOR.

Explanation: Clause 22 (Entire agreement)
This clause states that this agreement supersedes all prior arrangements and declares this to be the entire agreement between the parties. The purpose of this clause is to provide clarity and prevent any misunderstandings or reliance on informal arrangements before this agreement.

22. The Parties hereto acknowledge, declare and confirm that this Agreement represents the entire agreement between them regarding the subject matter hereof and cancels and supersedes all prior arrangements, agreements and understandings, whether oral or written, on the subject matter hereof.

Explanation: Clause 23 (Severability)
This clause clarifies that any invalid clause will not make the entire agreement void. The purpose is to allow the parties to uphold their obligations without any issues.

23. If one or more provisions of this Agreement are held to be void, voidable, illegal or otherwise unenforceable under applicable law, such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

Explanation: Clause 24 (Amendments)
This clause states that any amendments to the agreement shall be made only by a written document. The purpose is to prevent any unilateral modification of the agreement.

24. Any modification or amendment of any of the terms of this Agreement shall be valid and binding only if done by a written document signed by or on behalf of both Parties hereto.

Explanation: Clause 25 (No Waiver)
This clause clarifies that any delay in enforcing the terms of this agreement will not amount to a waiver of the rights mentioned in the agreement. This is necessary to provide flexibility in addressing any breach without compromising the legal remedies.

25. Any delay or indulgence or forbearance by the aggrieved Party in enforcing the terms and conditions of this Agreement shall not be construed as waiver on the part of the aggrieved Party of any breach or non-compliance of any of the terms and conditions of this Agreement by the defaulting Party nor shall the same in any manner prejudice the rights of the aggrieved Party under this Agreement and/or in law.

Explanation: Schedule
This part specifies the details of the flat, which is given on license under the agreement. It is necessary to provide the correct description to prevent any ambiguity among the parties about the location and size of the flat.

    THE SCHEDULE ABOVE REFERRED TO

Residential Apartment No. 707 admeasuring 900 sq.ft., on the 7th Floor of the building known as Nestle, 1B, being lying and situate at Pandurang Budhkar Marg, Worli, Mumbai 400 013.

Explanation: Signatures and receipt
Both parties sign along with witnesses to execute and validate this agreement. The receipt clause confirms the acceptance of the security deposit received by the Licensor from the Licensee.

IN WITNESS WHEREOF the Parties hereto have subscribed their respective hands to this Agreement the day and year first herein above written.

SIGNED AND DELIVERED by the
Withinnamed LICENSOR
MRS. SUNITA RAO
In the presence of

SIGNED AND DELIVERED by the
Withinnamed LICENSEE
MR. VIKRAM MEHTA
In the presence of

  RECEIPT

Received of and from the withinnamed the LICENSEE MR. VIKRAM MEHTA a sum of Rs. 1,80,000/- (Rupees One Lakh Eighty Thousand Only) by cheque No. 123456 dated 25th April 2025 drawn HDFC Bank, Worli Branch, payable at Mumbai towards Refundable Interest Free Security Deposit for Leave and License Agreement for the Licensed Premises namely residential Apartment No. 707 admeasuring 900 sq.ft., located on the 7th Floor of Nestle Building.

Witnesses
1.
2.

This is how the list of furniture will look

You can even mention the brand name to be specific in the description of the furniture.

Now that you have learnt how to draft a leave and license agreement, you must know the stamp duty and registration requirements also involved in this agreement.

What are the stamp duty and registration requirements of a leave and license Agreement?

The stamp duty varies from State to State and it is advisable to check the state stamp laws to understand the stamp duty payable on the agreement.

For example, in the State of Maharashtra, as per Article 36A of the Maharashtra Stamp Act, 1958, the stamp duty for a leave and license Agreement is as follows:

Clause (a):

When the agreement is for up to 60 months (5 years), with or without a renewal clause:

Stamp duty is 0.25% of the total amount, which includes:

1. Licence Fees or Rent (for the entire duration)
2. Non-refundable deposit/premium/advance
3. Interest on refundable security deposit, calculated at 10% per annum for the period of the agreement.

Clause (b):

When the agreement is for more than 60 months (i.e., more than 5 years), with or without a renewal clause:

The stamp duty shall be paid as per Article 36, clauses (ii), (iii), or (iv), depending on the duration and terms, in the following manner:

(ii) Exceeding 5 years but not exceeding 10 years (even if there is a renewal clause):

• Stamp duty = Same duty payable on a conveyance on 25% of the market value.

(iii) Exceeding 10 years but not exceeding 29 years (even if there is a renewal clause):

• Stamp duty = Same duty payable on a conveyance on 50% of the market value.
  

(iv) Exceeding 29 years, or in perpetuity, or where no definite period is stated:

• Stamp duty = Same duty payable on a conveyance on 90% of the market value.

You must know that the stamp duty on a conveyance of a property in Maharashtra is 6% (5% stamp duty + 1% metro cess) as per Article 25 of the Maharashtra Stamp Act.

Now coming to registration of the agreement, the registration of a leave and license agreement for a term less than one year is optional as per the Registration Act,1908

However, in the State of Maharashtra, as per section 55 of the Maharashtra Rent Control Act,1999, it is compulsory for the leave and license agreement to be in writing and registered. The registration charges for a leave and license agreement are Rs.1000/- in the State of Maharashtra.

Therefore, you must check your respective state rent control laws also once before determining if the agreement is required to be mandatorily registered or not.

Conclusion

With this article, you have understood that a leave and license agreement may be a simple document, but it can save your clients from major legal issues. You must draft a comprehensive leave and license agreement to protect the rights of the parties and also to prevent any future disputes. I would advise you to practice drafting this agreement so that you are confident enough to implement this new skill in your practice.

Frequently asked questions (FAQs)

1. Can a licensee sub-license the flat to a third party?

No, a licensee cannot sub-license the flat to a third party since it is a personal right given by the licensor to the licensee. Unless the licensor agrees to allow the licensee to do so in the agreement, the licensee cannot sub-license the flat to a third party.

2. Can a “force majeure” clause be included in a leave and license agreement?

Yes, a force majeure clause can be included in the agreement to excuse non-performance of the agreement due to events like natural disasters. This is a sample force majue clause:

“Neither party shall be liable for any failure or delay in performing their obligations under this Agreement due to unforeseen events beyond their reasonable control, including but not limited to natural disasters, war, riots, government restrictions, or pandemics, provided such events directly prevent performance of the agreement. The affected party shall notify the other party within 7 days of the event and take reasonable steps to mitigate its impact. If the event persists for more than 30 days, either party may terminate this Agreement by giving 15 days’ written notice, with the Licensor refunding the Security Deposit (subject to permissible deductions) upon surrender of the Licensed Premises.”

3. Can a clause for automatic renewal be included in a leave and license agreement?

Yes, it can be included in extending the agreement unless it is terminated with prior notice.

4. What happens if the leave and license agreement is not registered in Maharashtra?

If the leave and license agreement is not registered in Maharashtra, it will be unenforceable in court, and may allow the licensee to claim tenancy rights, and it will complicate the eviction process.

5. Can the Licensor deduct repair costs for wear and tear from the security deposit?

No, the licensor cannot deduct repair costs for normal wear and tear (e.g., minor wall marks)

However, if the damage is beyond the normal wear and tear (e.g., structural changes), then the licensor can deduct the cost as may be specified in the agreement.