Difference Between Tenancy Agreement And Leave And License Agreement

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A rental agreement is the most important document that is signed between a tenant and homeowner. Thus, one must ensure that all clauses are mentioned in it and with both parties’ knowledge

Often youngsters that migrate from smaller towns get confused between a Tenancy Agreement (TA) and a Leave and License Agreement (L&LA), further failing to understand which is the correct one to sign while renting an apartment. Explaining the difference, real estate lawyer Vinod Sampat says, “A L&LA is executed for a limited period and gives limited rights to the tenant, whereas a TA is for an indefinite period—as long as the building is standing. Under the L&LA, the tenant cannot sell the house. On the other hand, as per a TA, the tenant can inform the landlord and sell the house; the tenant, however, must pay a certain percentage of the amount to the landlord once the house is sold. Also, a tenant cannot make any changes to the house under the L&LA, whereas under a TA, a tenant can conduct internal renovations. So, in general cases of rental apartments, a L&LA is signed between the tenant and a landlord.” Now that the difference between the two is clear, let’s understand the must-haves of a Leave and License Agreement.

1. Personal details
The agreement must have the full names and contact numbers of all members of the tenant’s family and the full name of the landlord/homeowner. Also, ensure that the landlord’s residing address and tenant’s alternative address is also mentioned.

2. Property details
The agreement must include the address of the house that is being rented out. Also, mention if the common passage will be used by the tenant for any purpose, for instance, to keep the shoe rack. Including the number and description of rooms is also advisable. “Additionally, you can also mention the electronic appliances (TV, refrigerator, washing machine, microwave/oven, AC, fans, tube lights, etc) if you are providing any of them,” suggests Girija G, who gives her home on rent in Mumbai often.

3. Term of stay
The agreement must specify the minimum and maximum duration for which the tenant will be occupying the house. “I always mention that the tenant must live at least for three months and then if required, can vacate the home after giving a month’s notice,” mentions Girija.

4. Rent
Mentioning the amount of monthly rent isn’t enough. You should also mention the date on which the amount is due every month and the acceptable modes of payment. Also, in case you have agreed to more than one year, mention by how many per cent will the rent increase with each new year. Also, mention all the expenses that are covered in the rent amount; for instance, if the tenant must pay electricity or gas bills separately for each month or if it’s covered in the rent amount.

5. Security deposit
Ensure that the correct amount of deposit is mentioned in the agreement. Also, mention all clauses under which the money from the deposit will be deducted at the time of vacating the house (for instance, damage to the house, non-payment of monthly rent, etc).

6. About renewals
“The condition of renewing the agreement should be kept open. This way it does not become mandatory for the landlord to renew the agreement post its expiry and the tenant is also always alert [read: if anything wrong happens from their side, the landlord might not renew the agreement for the next year, putting them in trouble],” suggests Sandeep Kabdule, a real estate agent.

7. Notice period and  discontinuation
In case you as a landlord are unsure if you can let your tenant stay for the duration mentioned in the agreement, you must include a clause stating that you can ask them to vacate the home with a decent notice period (ideally of at least a month). On the other hand, you should also mention how many days prior to vacating the home willingly, the tenant should inform the landlord.

8. Other clauses
Check if the landlord has mentioned any other clauses/rules/restrictions, especially in terms of cooking, entry and exit timings, and having friends/family over to stay. Also, as a tenant, check if you can use the parking slot allotted to your landlord to park your vehicle.

source : timespropoerty

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