A well-drafted Leave and License Agreement is crucial for protecting both property owners and tenants. Missing or poorly worded clauses can lead to disputes, legal complications, and financial losses. This guide covers the essential clauses that must be included in your Leave and License Agreement.
1. Parties and Property Details
This is the foundation of your agreement and must be accurate:
- Complete names and addresses of both licensor (owner) and licensee (tenant)
- Identity proof details (Aadhaar, PAN, etc.) of both parties
- Property description: Complete address, flat/house number, area, floor, building name
- Property type: Residential, commercial, or mixed-use
- Furnished/Unfurnished status with inventory list if applicable
2. Duration and Validity
Essential elements:
- Clear start date and end date of the agreement
- Total duration (typically 11 months or less in Maharashtra)
- Renewal terms and conditions
- Notice period for renewal or termination
3. License Fee and Payment Terms
This clause should clearly specify:
- Monthly license fee amount (in words and figures)
- Payment due date (e.g., 5th of every month)
- Payment method (cash, cheque, online transfer, etc.)
- Late payment charges and interest rates
- Rent increase clause (if applicable, with notice period)
- Maintenance charges (who pays and how much)
4. Security Deposit
A critical clause that protects the property owner:
- Security deposit amount (typically 2-3 months' rent)
- When it should be paid (before or at the time of agreement)
- Interest on deposit (if applicable)
- Deduction conditions (for damages, unpaid bills, etc.)
- Refund terms (when and how it will be returned)
5. Property Use and Restrictions
This clause should clearly state:
- Permitted use of the property (residential/commercial)
- Restrictions on subletting or transferring
- Prohibited activities (illegal activities, modifications without permission)
- Number of occupants allowed
- Pet policy (if applicable)
6. Maintenance and Repairs
Clearly define responsibilities:
- Structural repairs: Owner's responsibility
- Minor repairs: Tenant's responsibility (plumbing, electrical, etc.)
- Regular maintenance: Who handles cleaning, painting, etc.
- Damage liability: Tenant responsible for damages beyond normal wear and tear
- Property inspection rights: Owner's right to inspect with notice
7. Utilities and Bills
Specify who pays for what:
- 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 utility connections in tenant's name
8. Termination and Vacating
Critical termination clauses:
- Notice period required for termination (typically 1-2 months)
- Conditions for early termination
- Penalty for early termination (if any)
- Vacating procedure and handover terms
- Return of security deposit after vacating
- Condition of property at the time of vacating
9. Default and Breach of Agreement
Protect yourself from defaults:
- Non-payment of license fee: Consequences and remedies
- Unauthorized use: What constitutes breach
- Damage to property: Liability and compensation
- Legal remedies: Right to terminate, claim damages, etc.
- Jurisdiction: Which court will handle disputes
10. Registration and Stamp Duty
Important legal requirements:
- Agreement must be registered within 4 months in Maharashtra
- Stamp duty payment responsibility (usually shared or specified)
- Registration charges (who pays)
- Consequences of non-registration
11. Force Majeure and Dispute Resolution
Additional protective clauses:
- Force Majeure: Protection against unforeseen circumstances
- Dispute resolution: Mediation, arbitration, or court proceedings
- Governing law: Applicable state laws (Maharashtra in this case)
12. Additional Important Clauses
Lock-in Period
Specify if there's a minimum period before which tenant cannot vacate, and any penalties for early termination.
Renewal Terms
Clear terms for renewal, including notice period, revised rent, and renewal charges.
Access Rights
Owner's right to access property for inspection, repairs, or showing to potential buyers, with reasonable notice.
Indemnity Clause
Protection against claims arising from tenant's use of property or tenant's actions.
Common Mistakes to Avoid
- Vague or ambiguous language
- Missing essential clauses
- Not specifying payment terms clearly
- Unclear maintenance responsibilities
- Missing termination procedures
- Not including dispute resolution mechanism
Conclusion
A comprehensive Leave and License Agreement with all essential clauses protects both parties and prevents future disputes. Each clause serves a specific purpose and should be carefully drafted to reflect the actual terms agreed upon.
It's always advisable to have your agreement reviewed by legal experts to ensure it's legally compliant and covers all necessary aspects. A well-drafted agreement is an investment in peace of mind.
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