A lease and a rent agreement both let someone use property, but they are legally different. A lease is a transfer of a right to enjoy immovable property for a term in exchange for rent, whereas a leave-and-licence only permits occupation and can be revoked. The difference decides whether registration is compulsory and what remedy the owner has if the occupier refuses to leave. This page explains the lease under the Transfer of Property Act 1882, how it differs from a licence, when registration is mandatory, and what an unregistered lease cannot do.
Lease, licence and leave-and-licence explained
Sections 105 to 107 of the Transfer of Property Act 1882 govern leases. Section 105 defines a lease as a transfer of a right to enjoy property made for a certain time, express or implied, in consideration of a price paid or promised. A licence, by contrast, is a bare permission to do something on the owners land that would otherwise be unlawful, and it is personal and revocable. A leave-and-licence is the common name for a licence to occupy residential or commercial premises where the owner keeps control and can ask the occupier to vacate on the agreed notice.
- In a lease the tenant gets an interest in the property; in a licence the occupier gets only permission.
- A lease is transferable and binds successors; a licence ends with the licensor or licensee.
- A lease for a year or more must be registered; a licence can be created by a simple writing.
When registration is compulsory
Section 107 of the Transfer of Property Act 1882, read with Section 17 of the Registration Act 1908, provides that a lease of immovable property from year to year, or for a term exceeding one year, can be made only by a registered instrument. A lease for a term of one year or less, or a monthly tenancy, may be created by an unregistered instrument or even orally, and the tenancy is then governed by local rent law. This is why an eleven-month agreement does not need registration, while a three-year lease does. Where the lease is registrable, both the lessor and the lessee must sign the instrument.
Consequences of an unregistered lease
If a lease that the law requires to be registered is not registered, it cannot be received as evidence of the transaction and cannot affect the property. The arrangement may still be treated as a monthly tenancy on the terms actually followed, such as the rent actually paid, but the owner loses the right to enforce the fixed term or the special covenants. Registration is therefore not a formality; it is what gives the lease its legal force. Where the tenant does not leave after the term, an eviction suit is the lawful route, not self-help. The stamp duty is charged as per the West Bengal schedule of the Indian Stamp Act on the rent and the term, and the amount varies, so it is computed at the time of drafting.
Renewal and termination clauses
- Renewal. State whether the lease renews automatically, whether the tenant must ask in advance, and how rent is revised on renewal.
- Termination. Set out the notice each side must give, the grounds for early termination, and what happens to the security deposit.
- Forfeiture. A clause allowing the owner to re-enter for non-payment or breach must be drafted expressly, because courts read forfeiture clauses strictly.
- Holding over. Say what happens if the tenant stays after the term ends, and at what rent.
Documents and annexures to attach
- Proof of ownership — a registered deed or mutation record.
- Identity and address proof of lessor and lessee.
- Schedule of the premises with fixtures and fittings.
- Receipt of advance or security deposit.
- Previous lease or agreement, if any, for the chain.
Common mistakes
- Calling a document a lease when it is really a licence, or the reverse, so the wrong remedy is pursued.
- Not registering a lease of more than one year and then discovering it cannot be enforced.
- Leaving the renewal and rent-revision terms silent.
- Omitting a clear notice clause, which leads to disputes about when the tenancy ended.
FAQs
Is a registered lease necessary in India?
Yes, if the lease is from year to year or for a term exceeding one year, registration under the Registration Act 1908 is compulsory and the instrument must be signed by both parties. A lease of one year or less may be made without registration.
What is the difference between a lease agreement and a rent agreement?
A rent agreement is often a short leave-and-licence or monthly tenancy, while a lease creates a transferable interest for a fixed term. The label matters less than the substance: a court looks at whether exclusive possession passed for a term in return for rent.
Can an unregistered lease be used in court?
An unregistered lease that the law requires to be registered cannot be used as evidence of the lease itself. The occupant may be treated as a monthly tenant on the rent actually paid, but the fixed term and special covenants cannot be enforced.
How do I evict a tenant under a lease?
The owner must follow the notice and procedure in the agreement and the applicable rent statute, and sue in the civil court if the tenant does not leave. Self-help eviction is not permitted, and the owner may be liable for it.
FileX Advocates & Legal Consultants, Kolkata, drafts, stamps and registers lease and licence agreements across West Bengal and defends and brings eviction and tenancy suits before the Calcutta High Court and the City Civil courts. Call +91 7439811422 or WhatsApp us for a free first consultation. Read more on landlord and tenant disputes, review our landlord-tenant formats, or contact the firm.