A poorly drafted Leave and License Agreement can lead to disputes, legal complications, and financial losses. Many property owners and tenants make avoidable mistakes that can cause significant problems later. Here are the most common mistakes and how to avoid them.
1. Not Registering the Agreement
Mistake: Creating an agreement but not registering it with the Sub-Registrar office.
Consequences:
- Unregistered agreement is not admissible as evidence in court
- No legal protection for either party
- Cannot be used for address proof or official purposes
- May face penalties for late registration
Solution: Always register your Leave and License Agreement within 4 months of execution. This is mandatory in Maharashtra and provides legal validity.
2. Vague or Incomplete Property Description
Mistake: Not providing complete and accurate property details.
What to Include:
- Complete address with flat/house number
- Building name and floor
- Area in square feet
- Property type (residential/commercial)
- Furnished/unfurnished status
- Any specific areas included (parking, storage, etc.)
3. Unclear Payment Terms
Mistake: Not clearly specifying license fee amount, payment date, method, and late payment charges.
Essential Details:
- License fee in words and figures
- Exact payment due date (e.g., 5th of every month)
- Payment method (cash, cheque, online transfer)
- Late payment charges and interest rate
- Maintenance charges (who pays and how much)
4. Missing Security Deposit Clause
Mistake: Not clearly defining security deposit terms, refund conditions, and deduction criteria.
Must Include:
- Security deposit amount
- When it should be paid
- Conditions for deduction (damages, unpaid bills)
- Refund timeline after vacating
- Interest on deposit (if applicable)
5. Ambiguous Maintenance Responsibilities
Mistake: Not clearly defining who is responsible for what repairs and maintenance.
Clarify:
- Structural repairs (owner's responsibility)
- Minor repairs (tenant's responsibility)
- Regular maintenance (cleaning, painting)
- Damage beyond normal wear and tear
- Property inspection rights
6. Missing Termination Clauses
Mistake: Not specifying clear termination procedures, notice periods, and vacating terms.
Important Clauses:
- Notice period required (typically 1-2 months)
- Early termination conditions and penalties
- Vacating procedure and handover terms
- Property condition at time of vacating
- Security deposit refund process
7. Not Including Utility Bill Responsibilities
Mistake: Assuming utility bill responsibilities without clearly stating them in the agreement.
Specify:
- Electricity bills (usually tenant)
- Water bills (usually tenant)
- Gas connection and bills
- Internet and cable TV
- Property tax and society maintenance (usually owner)
- Transfer of connections in tenant's name
8. Incorrect or Missing Party Details
Mistake: Using incorrect names, addresses, or missing identity proof details.
Verify:
- Full names as per Aadhaar/PAN card
- Complete addresses of both parties
- Identity proof numbers (Aadhaar, PAN)
- Contact numbers and email addresses
- All details must match official documents
9. Not Specifying Property Use Restrictions
Mistake: Not clearly stating how the property can and cannot be used.
Include:
- Permitted use (residential/commercial)
- Restrictions on subletting
- Prohibited activities
- Number of occupants allowed
- Pet policy
- Modification restrictions
10. Missing Dispute Resolution Clause
Mistake: Not including how disputes will be resolved.
Should Include:
- Dispute resolution method (mediation, arbitration, court)
- Jurisdiction (which court will handle disputes)
- Governing law (Maharashtra state laws)
- Process for resolving conflicts
11. Not Paying Proper Stamp Duty
Mistake: Underpaying or not paying stamp duty correctly.
Remember:
- Stamp duty is 0.25% of total rent for 11 months
- Must be paid before registration
- Can use e-stamp or physical stamp paper
- Incorrect payment can invalidate the agreement
- Calculate accurately to avoid penalties
12. Using Generic Templates Without Customization
Mistake: Using generic online templates without adapting them to your specific situation.
Why This is Problematic:
- May not cover your specific requirements
- Could include irrelevant clauses
- Might miss important local legal requirements
- May not protect your unique interests
Solution: Always customize the agreement to your specific needs or seek professional help.
How to Avoid These Mistakes
- Seek Professional Help: Consult legal experts or authorized service providers
- Use Checklists: Create a checklist of all essential clauses and requirements
- Review Carefully: Read the entire agreement before signing
- Verify Documents: Ensure all party details and documents are accurate
- Register Timely: Complete registration within 4 months
- Keep Copies: Maintain multiple copies of the registered agreement
- Update Regularly: Review and update agreements when renewing
Conclusion
Avoiding these common mistakes can save you from legal disputes, financial losses, and unnecessary complications. A well-drafted and properly registered Leave and License Agreement is an investment in peace of mind and legal protection.
Remember, it's always better to invest in professional assistance than to face the consequences of a poorly drafted agreement. Expert guidance ensures your agreement is legally sound and protects your interests.
Need Professional Help?
Our legal experts can help you create a comprehensive Leave and License Agreement that avoids all these common mistakes. We ensure your agreement is legally compliant, properly registered, and protects your interests.
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