Rental agreement, lease or leave and licence: what's the difference?

"Rental agreement" is the everyday name for the paper you sign to rent a home. In law, that paper usually creates one of two different relationships: a lease, which transfers a right to enjoy the property for a period and gives the occupant an interest in it, or a licence (the "leave and licence" agreement), which is only a personal permission to use the property and gives no interest in it. Which one you have depends on what the document actually grants, not on its heading, and the difference affects registration, what happens if the home is sold and how the arrangement ends. This is general information, not legal advice on your own agreement.

"Rental agreement" is a name, not a legal category

People use rental agreement, rent agreement and lease loosely; the law is more exact. The Transfer of Property Act, 1882 defines a lease, and the Indian Easements Act, 1882 defines a licence. A document headed "Rental Agreement" will usually be one or the other.

For what a good agreement contains and how the paperwork runs, read rental agreements in Bengaluru; for the steps before it, see how to find a rental home in Bengaluru.

What a lease is

Section 105 of the Transfer of Property Act defines a lease of immovable property as a transfer of a right to enjoy the property, for a certain time or in perpetuity, in return for a price paid or promised, or for rent paid periodically or on agreed occasions. The owner is the lessor and the tenant is the lessee.

The important word is transfer: the lessee receives a right in the property itself for the term. Where the contract does not say otherwise, section 108 spells out what follows:

• the lessor must put the lessee in possession on request;
• a lessee who pays the rent and keeps the terms may hold the property for the term without interruption;
• the lessee may transfer or sub-let their interest, though the agreement can restrict this.

If the owner sells during the term, the buyer steps into the owner's place: unless agreed otherwise, they get the owner's rights under the lease and, if the lessee chooses, the owner's obligations (section 109).

What a leave and licence is

Section 52 of the Indian Easements Act, which a 1978 Karnataka amendment extends to the whole state, defines a licence as a right to do something on another person's property that would otherwise be unlawful, where the right is not an easement or an interest in the property. In a home, that means permission to live there. The contrast with a lease is sharp:

• No interest passes. That is part of the definition.
• It is personal. Apart from a licence to attend a place of public entertainment, the licensee cannot transfer it (section 56).
• It does not bind a buyer. A buyer of the property is not, as such, bound by the licence (section 59).
• It can be revoked, subject to the exceptions in section 60, and a licence for a limited period is deemed revoked when that period ends (section 62).
• The licensee is protected on the way out. Where a licence is revoked, the licensee is entitled to a reasonable time to leave and remove belongings they were allowed to keep there (section 63). A licensee who paid and is evicted by the owner, through no fault of their own, before enjoying what they paid for can claim compensation (section 64); a licence that simply runs its term does not trigger this.

Lease and licence side by side

Why the heading does not decide it

Both Acts define these relationships by what they do, so the title on the first page is a clue, not a verdict. A document headed "Leave and Licence" that hands over the home for a fixed term with a lessee's rights, or one headed "Lease" that grants only a revocable permission, is what its clauses and the actual arrangement make it, not what its label says.

If the heading and the clauses disagree, ask a lawyer before you sign.

Bengaluru, Mumbai and Hyderabad

Bengaluru. Many agreements here run for 11 months, a term that matters for registration but does not by itself make a document a lease or a licence. The Karnataka Rent Act, 1999 applies only to some premises; where it applies, a tenancy must be in writing (section 4), and its definition of a tenant leaves out a person holding a licence under the Easements Act (section 3).

Mumbai. The Maharashtra Rent Control Act, 1999 requires every agreement for leave and licence or letting of premises made after it took effect to be in writing and registered (section 55). Registration is the landlord's responsibility; without a registered agreement, the occupant's version of the terms prevails unless proved otherwise, and default is a punishable offence. The Act has exemptions, so check whether it covers your premises.

Hyderabad. Karnataka's stamp law extends only to Karnataka, so for a Hyderabad home, check the duty and fees with Telangana's Registration and Stamps Department.

Registration: when it is compulsory

Section 17(1)(d) of the Registration Act, 1908 makes registration compulsory for a lease from year to year, for any term exceeding one year, or reserving a yearly rent. Section 107 of the Transfer of Property Act says those leases can be made only by a registered instrument, signed by both parties. Note the third limb: a lease at a yearly rent is caught whatever its length.

An 11-month lease at a monthly rent falls outside that list, though it can still be registered by choice. The clause names leases, not licences; state law can add its own requirement, as Maharashtra's does.

If a document that had to be registered is not, section 49 says it does not affect the property and cannot be received as evidence of the transaction affecting it, apart from limited exceptions. So neither side can rely on an unregistered three-year lease to establish the three-year term it sets out.

Stamp duty in Karnataka

Stamp duty is separate from registration and is payable whatever the document is called. The Karnataka Stamp Act, 1957 has one schedule article for a lease (Article 30) and another for a licence of immovable property (Article 32-A), and the Department of Stamps and Registration lists them together in its table of duties and fees.

As checked on 5 October 2026, both articles charge a residential lease or licence of up to one year at fifty paise per hundred rupees (0.5%) on the total of the average annual rent, premium, fine and money advanced, up to a maximum of ₹500. For a lease, the schedule counts the security deposit as money advanced. Longer terms are charged at higher percentages, without that cap. Check the department's current table before you pay.

Unless the agreement says otherwise, the Act puts the stamp cost on the lessee or licensee (section 30), so write down who pays. A document that is not duly stamped cannot be admitted in evidence, acted on or registered until the duty is paid, and paying later can bring a penalty on top (section 34). Stamp duty and registration in Karnataka explains the department's process.

Renewal and ending the arrangement

A lease ends in the ways section 111 lists, including the term running out, surrender by agreement, forfeiture for breach of an express condition that allows re-entry (followed by written notice), and the expiry of a notice to quit duly given. Where the agreement does not fix the term or the notice, and no local law or usage says otherwise, a lease of a home is deemed to run from month to month, ending on fifteen days' notice in writing, signed and served as section 106 requires. And if the lessee stays on after the lease ends and the owner accepts rent or otherwise agrees to their staying, the lease is renewed from month to month unless agreed otherwise (section 116).

A licence for a limited period is deemed revoked when the period ends (section 62). Earlier revocation is subject to section 60, the agreement's notice terms and the protections in sections 63 and 64 described above, and a state rent law can add its own rules.

Either way, renew with a fresh, properly stamped document signed before the old term ends, with any change in rent written into it.

What it means for owners

• If the lease runs from year to year or for over a year, or the rent is fixed by the year, register it.
• Write down notice, lock-in, renewal, subletting, the deposit and who pays the stamp duty.
• If you might sell during the term, remember that a buyer steps into your place under a lease but is not, as such, bound by a licence.
• If someone will sign for you while you live abroad, read power of attorney for NRI property owners first.

When Nest Partners handles a letting through tenant placement or full management, the agreement is prepared, reviewed and approved online with no Nest Partners fee to process it; stamp duty and registration are separate, and e-signing is being introduced.

What it means for tenants and licensees

• Read what the document grants: possession for a term, or a permission to occupy.
• Check notice for both sides, any lock-in, renewal and how the deposit comes back; security deposits and moving out covers the last.
• Read the agreement before you sublet or hand the home to anyone: a lessee can transfer their interest unless the agreement restricts it, but a licence cannot be transferred at all.
• Keep a signed, stamped copy, and pay rent by bank transfer or UPI.

Common mistakes

• Treating the heading as the answer.
• Agreeing a term of more than a year, or a yearly rent, and not registering the lease.
• Assuming an 11-month agreement needs no stamp duty.
• Letting the term lapse and carrying on informally.
• Reusing another state's template, with that state's law quoted in it.

Before you sign: a checklist

1. Names and property details match the ownership documents, and the signatory is entitled or authorised to let the home.
2. The document states what is granted, the term and the start date.
3. Rent, deposit and its return, maintenance and utilities are written down.
4. Notice, lock-in and renewal are clear and consistent.
5. Stamp duty is paid under the right article, registration is arranged where required, and the document says who pays each.
6. The inventory is attached, and both sides keep a complete copy.

Questions to ask before signing

• Is this meant to be a lease or a licence, and do the clauses match?
• Does the term or rent make registration compulsory, and who will arrange it?
• What happens if the owner sells during the term?
• How can each side end it early, and with how much notice?

When professional legal advice is sensible

Ask a lawyer (an advocate who handles property or tenancy matters) to review the agreement when:

• the term is longer than a year, or the rent is fixed by the year;
• the heading and the clauses seem to point different ways;
• the owner lives abroad or someone signs under a power of attorney;
• the home is jointly owned, mortgaged or about to be sold;
• a state rent law may cover the premises, or a disagreement has begun.

Common questions

Is an 11-month rental agreement a lease or a licence?

It can be either: what the document grants decides that, not its length. An 11-month lease at a monthly rent falls outside compulsory registration under the Registration Act (Maharashtra's rent law is stricter where it applies), and stamp duty is payable either way.

Can an owner end a leave and licence whenever they like?

Not without consequences. The Act allows revocation, subject to section 60, but the agreement's notice terms still count, and sections 63 and 64 protect the licensee as described above. If an occupant will not leave, take legal advice rather than acting alone.

Whatever you sign, the safest agreement is one whose words describe the arrangement you both actually intend.