When it comes to renting property, two of the most commonly used agreements are the leave and license agreement and the rent agreement. While these two agreements may seem similar, they have significant differences that tenants and landlords should know about.

Let`s take a closer look at the differences between leave and license agreement and rent agreement.

Definition

A leave and license agreement is a contractual agreement between the owner of the property (licensor) and the person taking the property on rent (licensee). The agreement allows the licensee to temporarily use the property for a specific period, usually up to 11 months.

On the other hand, a rent agreement is a contract where the owner of the property (landlord) agrees to give the property to the tenant for a specified period. This agreement is usually for a more extended period, such as 11 months or more.

Duration

As mentioned earlier, the leave and license agreement is generally for a shorter term, usually 11 months or less. This agreement is renewable and can be extended if both parties agree.

In contrast, a rent agreement is typically for a longer period, usually 11 months or more. However, the duration of the agreement can be negotiated between the two parties.

Termination

A leave and license agreement can be terminated by either party after serving a notice period. The notice period is usually 15 to 30 days, and the licensee must vacate the property after the termination of the agreement.

A rent agreement, on the other hand, can be terminated by the landlord only if the tenant violates the terms of the agreement. The landlord has to provide the tenant with a notice period of 30 to 60 days before terminating the agreement.

Nature of Use

A leave and license agreement allows the licensee to use the property for a specific purpose, such as a residence or an office. This agreement clearly defines the scope and nature of use of the property.

A rent agreement allows the tenant to use the property for any legal purpose, subject to the terms and conditions of the agreement. The tenant can use the property for residential or commercial purposes.

Conclusion

In summary, the primary difference between leave and license agreement and rent agreement is the duration, termination, and nature of use. A leave and license agreement is suitable for short-term use, whereas a rent agreement is ideal for a long-term engagement. Both agreements have their benefits and limitations, and tenants and landlords should choose an agreement that suits their needs. Knowing these differences will help you make an informed decision when renting or leasing a property.