Most landlords in India, including NRIs, now let out residential property through an 11-month leave and license agreement rather than a formal tenancy, because a license creates only a personal permission to occupy -- not a transferable interest in the property -- and, in most states, falls outside the tenant-protective eviction restrictions of the state's Rent Control Act, making it easier to recover possession if needed.
Why “leave and license” and not a formal tenancy
Under the Indian Easements Act, 1882, a licence is merely a personal permission to use property that
creates no interest in the property itself, unlike a lease/tenancy which does create such an interest. Because
most state Rent Control Acts are drafted around protecting tenants, structuring the arrangement as a licence
-- commonly for a fixed term of 11 months, renewable -- keeps many such arrangements outside those Acts'
tenant-protective eviction restrictions in states where courts have accepted this distinction, making it
considerably easier for the owner to recover possession at the end of the term compared to a Rent Control
Act-governed tenancy.
Registration, stamp duty, and police intimation
A leave and license agreement should be executed on appropriately stamped paper and, in most states,
compulsorily registered -- an unregistered agreement can create evidentiary difficulties later, even though
the underlying arrangement may still be enforceable. Many cities and states also require landlords (or their
local representative, since this is one of the more common tasks an NRI landlord delegates through a Power of
Attorney) to submit tenant/licensee details to the local police station -- a step increasingly done online in
several states -- both as a legal requirement and as a basic security precaution.
What an NRI landlord should still document carefully
Even though a licence is generally easier to terminate than a full tenancy, the agreement should still
clearly specify the licence fee, security deposit and its refund terms, maintenance responsibilities, notice
period for termination by either side, and the licensor's right of entry/inspection. Since an NRI landlord is
often not physically present to hand over or take back possession personally, the agreement should also
identify, or the landlord should separately execute, a Power of Attorney authorizing a trusted person in India
to sign the agreement, collect the licence fee, inspect the property, and take back possession at the end of
the term.
Common mistakes NRI landlords make with leave and license arrangements:
- Using an unstamped or unregistered agreement, which weakens the owner's position if a dispute
arises.
- Skipping the police intimation requirement where the local rules mandate it.
- Not giving the local representative (via Power of Attorney) clear, written authority to act on
renewal, termination, and possession matters, causing delay when a decision needs to be made
quickly.
Does a leave and license agreement completely avoid Rent Control Act protections for the occupant?
In many states, courts have treated a genuine leave and license arrangement as falling outside Rent Control
Act tenant protections, but this depends on the specific state's law and on the agreement genuinely being a
licence in substance, not just in name -- an arrangement drafted as a “licence” but functioning as a de facto
tenancy can still be reclassified by a court on the facts.
Can an NRI landlord sign a leave and license agreement without being physically present in India?
Yes -- typically through a Power of Attorney authorizing a trusted representative in India to execute the
agreement, collect payments, and manage the property on the NRI owner's behalf; see this platform's Property
guides for the country-specific POA authentication process.
Is stamp duty payable on a leave and license agreement?
Yes -- stamp duty (the rate varies by state and by the agreement's term/value) applies, and the agreement
should be executed on correctly stamped paper; an under-stamped agreement can face admissibility issues if
produced as evidence later.
