LawFarm- Advice & Lawyers Online

Share on facebook
Share on linkedin

Difference between Lease and License

Lease and License may sound like the same thing and one must have heard them used interchangeably. However, they are two separate legal concepts and offer different rights and duties. Let’s get to know more about them.

What Is A Lease?

A lease is a contract between a tenant and a landlord that provides the tenant with an exclusive interest in the property. It gives an individual the right to control the property. A lease requires either a written or an oral agreement between two parties, the landlord and the tenant however, It can also be transferred to another person. Defined under SECTION 105 of ‘TRANSFER OF PROPERTY ACT’, a lease in simpler terms means a type of contract which gives a party an interest in the owner’s property. It can be in the form of informal documents drawn up between the lessor and lessee. However, most leases are standardised legal documents. Many leases will also include restrictions on the use of the property. For example, a car lease will limit the number of miles the vehicle can be driven per year. A lease for a rental apartment may restrict the property from being used for business or retail. A lease also remains unaffected by the transfer of the property by sale in favour of a third party if the third party is not against such type of lease. Leases are also transferable and heritable and their Revocability totally depends upon the terms of the contract.

What Is A License?
A license is a permission to a licensee to conduct any activity on the owner’s property. It only gives permission or the right to act on the property and does not always require a written agreement.
Defined under SECTION 52 OF ‘THE EASEMENTS ACT’, the license is no more than permission for someone to do some act that otherwise is unlawful in regard to the land of another person in the absence of that permission. So, license simply means permission. What having a license does is that it prevents what would otherwise be a tort. For example, trespass and therefore having a license means of course that you do not break the law. Unlike a lease, a license does not give an interest in land, it is not transferable either and it will not be enforceable against a third party. A license is only mere permission that is terminable at will as it has no proprietary interest. Licenses are governed under the Indian Easements Act. It can be revoked as per the desire of the parties unless such license is together with a transfer of property and such transfers are in force; or the licensee, acting upon the license, has executed a work of permanent character and incurred expenses in the execution. The death of any party to the license terms the license terminated. A license does not always require a written agreement. A license can be granted even without the owner and the license ever meeting. An example can be buying a ticket to see a football match. It gives one permission to enter the stadium without meeting its owner in person.

Difference Between Lease And License

Agreement between two parties:
A lease requires a written or an oral agreement between two parties, the landlord and the tenant while A license does not always require a written agreement.
Interest in real property :
A lease creates an interest in the property for the term of the lease, one has some ownership rights in the property as agreed to in the contract. While a license does not grant any interest in the property.
Transferability :
One can transfer the lease to another person while a license cannot be transferred.
Revocability :
The Revocability of a lease depends upon the terms of the contract However a license is revocable.

Conclusion

Even though both Lease and License provide interests to a person they differ in various ways stated above. Thus, the lease is a type of contract which allows a person to enjoy the interest in a property while a license is just mere permission required to carry out activities on a property.

References

http://www.legalservicesindia.com/article/1765/Difference-between-lease-and-licence.html
https://www.legalbites.in/lease-and-license
https://www.mondaq.com/landlord-tenant–leases/773046/difference-between-leasing-and-licensing-in-global-context
https://blogs.findlaw.com/law_and_life/2015/03/what-is-the-difference-between-a-lease-and-a-license.html

By Simran Kaur