The
landlords have to take all necessary precautions to protect their
rights through appropriately worded contractual documents called Leave and licence agreements. Rental Agreements
are popular, but leave and licence agreement is more advanced and
protects the interests of the owners. This is widely used in Mumbai and
other metros and is gradually being adopted in Bangalore.
What is a licence?
Licence agreement is a document granting permission to use a land without a right to
exclusive possession and such transactions are governed by section 52 of
the Easement Act; however the Transfer of Property Act does not refer to leave and licence as a mode of Transfer of Property.
Section
52 of the Indian Easement Act, defines licence as where the grantor
grants to another person or number of other persons, a right to do, or
continue to do in the immovable property of the grantor, something which
would, in the absence of such permission, be unlawful and such a right
does not amount to an easement or an interest in the property, the right is called a licence.
A
licence is notionally created where a person is granted the right to
use the premises without being entitled to exclusive possession of the
premises or the circumstances and conduct of the parties show that all
that was intended was that the grantee should be granted a personal
privilege with no interest in the property. Thus, if the agreement
is merely for the use of the property in a certain way and on certain
terms, while the property remains in the owner’s possession and control,
the agreement will operate as a licence agreement.
The person
who grants the right to do something on his immovable property is called
grantor or licensor and the person who gets the right is licensee.
Licence is a personal right given to the licensee and therefore cannot
be transferred by the licensee or exercised by his servants and agents
Thus, the licence is the grant of permission to do something upon the
immovable property, however it does not create any right in the
immovable property in favour of the person, who does something. It is
different from lease, which is a mode of Transfer of Property, where the
lessee gets certain rights including the possession to do something
that is occupying or residing. Even the possession is not exclusive, in
leave and licence but deemed to the joint possession of both, the
licensor or licensee. It is not an easement right and is in fact akin to
residing in a lodge on payment of charge. The charges paid for
occupation is called compensation.
Similarly, where the licensor
transfers the immovable property to another person by way of sale, gift,
etc., the transferee is not bound by the licence. This is not so in
case of rented or leased property, where the transferee is bound by the terms of agreement made between the lessor and lessee.
Revocation of Licence
a. Where the licensor ceases to have any interest in the property.
b. Where the licensee voluntarily relinquishes the licence granted.
c.
Where the licence is granted for certain period or to do some
specific act and on expiry of that certain period or completion of the
act or non-performance of the act.
d. Where the property in respect of which licence is granted is destroyed or permanently altered by superior force.
e. Where the licensee becomes the owner of the property.
f. Where the purpose for which licence is granted becomes impracticable or abandoned.
g. Where the office, the employment or the character for which licence was granted ceases to exist.
h. The licensee ceases to use the property for an unbroken period of 20 years.
Leave and Licence Agreements:
Though there are definite legal provisions,
which separate licence agreements from lease agreements or tenancy
agreements, often it is confusing leading to litigation. Outwardly both
lease and licence seem similar. In lease or renting, a property is given
to some other person for definite period on payment of some specified
amount, which may be lump sum, or periodical called lease amount or
rent. Similarly in leave and licence also property is given to some
other person for use on payment of compensation. The real determining
factor is the creation of interest in the property. It has been held in
many cases that the intention of the parties and their conduct are
important to determine whether a particular case is licence or lease. A
provision to keep the property in good and tenantable repairs would be
an indication in favour of lease or tenancy than licence.
Principles for Licence:
In another case, the court has laid down the following principles for determining the agreement as licence:
a. The agreement is signed by the licensee only.
b. The licences for carrying the business stand in the name of licensor.
c. Both the parties have control over the property,
d. Admission made by the licensee in subsequent correspondence indicating that the agreement is a mere licence
It
has also been held that, if the licensee under the terms of licence
constructs any structure of permanent nature and the construction made
by the licensee with the knowledge and consent of the licensor; the
licence cannot be revoked, likewise the licence cannot be revoked, when
coupled with transfer of property and such transfer is in force.
So
proper care should be taken while preparing the leave and licence agreement to include the points mentioned by different courts. The
agreement should adhere to the following in general:
a. The period of licence should not be more than 11 months; even if feasible no definite period should be mentioned.
b. There should not be provision to extend the agreement with mutual consent.
c. The licence should be liable for cancellation without assigning any reason.
d. The possession should not be exclusive.
e.
There should not be any provision for termination of licence or
re-entry, if mentioned it would amount to exclusive possession and
transfer.
f. There should not be any clause about keeping property in good and tenantable repairs, which is an indication of tenancy.
g. Avoid mentioning clauses pertaining to the payment of taxes, rates by the licensee.
h. Avoid mentioning clauses pertaining to letting or subletting, since license does not confer such rights on the licensee.
Contents of the Agreement:
Just
incorporating the words licence, licensor and licensee in an agreement,
does not make a document a leave and licence agreement, but the
contents, intention of parties and their conduct determine the nature.
Courts are inclined to treat the documents as that of lease, in case of
any doubt as to whether a document is a leave and licence agreement.
The
licence dealt in this article is different from nature of licence
issued and granted to sell goods or to drive motor vehicles or to work
as agents. Licence to use immovable property, is a contractual
permission governed by Easement Act and is not a statutory licence.
Drafting a leave and licence agreement is more difficult than any other
document and only experienced and skilled advocates
would be in a position to ensure that the agreement retains only the
characteristics of a leave and licence agreement and leave no scope for
any other interpretation of such agreements. It is always preferable to
go in for leave and licence agreement as it protects the rights and interests of the owner without giving undue favour to the occupants.
Property sales registrations in Mumbai fell about 5% in August compared with July, as Buyers continued to resist purchasing houses in a sluggish real estate market. On a year-on-year basis too, registrations have fell 2.4%. The absolute decline from the peak of May stands at 13%, a September 21 report by domestic brokerage firm.
Lack of project launches, dearth of options in the affordable housing segment coupled with high interest rates and Developers holding on to higher prices continue to ail housing sales. The onset of the festival season could see a bit of cheer for residential sales.
According to the findings of Real Estate Consultant CB Richard Ellis’s (CBRE) August 2012 report titled ‘Market View India Residential’, the residential market in Mumbai witnessed subdued growth in the first half of 2012 in the back drop of high interest rates. While there was a decline in supply addition compared to the second half of 2011, the stock of unsold inventory increased during the review period.
South and Central Mumbai, which offer premium residential options, witnessed limited supply during the first half of 2012. Developers adopted a cautious approach due to large inventory of unsold stock in these micro-markets.
While Mumbai continues to be a prime residential investment market, affordability and credit costs have become critical issues guiding residential demand in the City. High interest rates and weak Investor sentiment have taken a toll on the sector. A downward revision of interest rates by the RBI might encourage Buyers and Investors to revive decisions.
According to a report, by Knight Frank India, and another Global Real Estate Consultant, the Mumbai residential market has an unsold inventory of 90,000 units which forms 37% of the total residential supply under construction.
They were selling 80,000 units a year, now they are at 45,000. It’s a huge dip. But, the liquidity crisis is not as widespread. Many projects have become cash neutral in terms of the sales achieved. No economy can last a sustained period of downturn. Already, interest rates are taking a ‘U’ turn, which should boost the demand soon.
What are the other essentials of a Valid Agreement?
Under Section 10 of the Indian Contract Act 1872, “All agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void.”
The following are the essentials of a valid agreement
1. There must be two parties one making the offer and the other must accept the offer made by the other party.
2.There must be an intention among the parties to create a legal relationship
3.The parties to an agreement must be competent to contract. In other words, the person must be major, must be of sound mind and must not be declared disqualified from contracting by any law to which he is subject.
4.There must be a lawful consideration.
5.There must be free consent of the parties to the agreement.
6.The object of an agreement must be lawful.
7.The terms of the agreement must be certain and unambiguous.
8.The agreements must not have been expressly declared void under the law.
9.The terms of the agreement must be capable of performance.
10.The agreements must comply with the formalities in writing and others like registration, stamp duty etc.,
Franking of Stamp Papers
Common man wants tiny denomination of the stamp papers for varied functions like legal instrument, Rental agreements, agreements, endeavor, power of lawyer, bonds, note of understanding etc. Public wants revenue enhancement of the denomination of Rs20, 50,100 & two hundred for corporal punishment affidavits, rental agreement, Indemnity Bonds and Sale Agreement severally . These square measure all the common demand of stamp duties for giving legal sanction to any quite documents. Now-a-days the govt. departments square measure demand for getting affidavits and indemnity bond for varied functions.
Non-availability
Previously, department of revenue enhancement was appointing the approved stamp vendors to sell the stamp papers for the on top of aforementioned documentation purpose. it absolutely was sort of a public fare value retailers, whereby such stamp papers were simply accessible not solely altogether the necessary places however additionally in a {very} very remote and interior villages. Infact, Stamp papers were accessible even within the late night additionally. Any understanding between the parties are going to be reduced in writing on the stamp paper and would be signed on it, because the same are going to be binding on each the parties. when the Telgi scam, from 01/04/2003, exploitation stamp papers for the aim of any documentation has been entirely prohibited in province.
S.B.M.paper
After the modification of Section 10A of the province statute, 1957, provision has been created for payment of revenue enhancement by DD/Pay Order or Bankers Cheque, drawn in favour of the involved Sub-Registrar workplace purchasable deeds and alternative documents. getting stamp papers of tiny denomination, solely 2 possibility square measure accessible. One is, franking the stamp paper within the involved sub-registrar workplace and another one is getting the document sheet from the banking concern of Mysore. sadly, each the modes of getting stamp papers square measure terribly tedious since it involves ton of procedure and formalities. Further, the aforementioned facility is avaible to the general public just for five to six hours on a daily basis. Infact solely in few branches of banking concern of Mysore the ability of supplying stamp papers square measure accessible.
In such case, public has to stock up the challan and mention the denomination that stamp paper is needed and consequently has got to pay the requisite commission charges on such quantity and later has got to stand on a really long queue. therefore obtaining a stamp paper in SBM could be a time overwhelming method. Again, such approved branches of banking concern of Mysore don't seem to be a lot of curious about supplying this stamp paper rather they're concentrating additional on their banking business. Infact, among those authorised branches additionally, just one or 2 banks solely can issue the stamp paper on it specific date and priority are going to be given for his or her regular customers of the aforementioned Bank.
Franking procedure
The matter has got to be typewritten within the written report or document sheet and has got to be submitted for franking in conjunction with the applying, however while not date and signature of the parties to the aforementioned document. This facility is on the market in bound specific sub registrar offices solely like Jayanagar, Gandhinagar, Basavanagudi, Shivajinagar, Rajajinagar, Kengari, Anekal Sub registrar offices, this facility is on the market and therefore the franking time is just between 10:30 A.M. to 3:30 P.M, excluding the lunch hour. Rules and laws varies from one sub-registrar workplace to the opposite. If the party produces the documents for franking, the involved sub-registrar might refuse by varied reasons. for instance, if someone created a lease agreement quite eleven months, or that the agreement involves advance quantity or if GPA is dead in favour of person aside from his/her friend then it should be refused because of short revenue enhancement. However, it's not a obligation of the sub-registrar wherever the franking of the revenue enhancement is completed to establish the revenue enhancement, however it's by the District Registrar or the Court that ought to decide the requisite revenue enhancement on any document at the time of presenting the documents.
Fake Papers
For the past 2 years, tiny denomination stamp papers were accessible simply all over. when ending of the stamp papers, government has not taken any initiative to induce the little denomination of the little papers by straightforward technique, that has forced the general public to shop for the paper within the easiest method within the Taluk workplace and sub registrar offices entrance, that has resulted within the creation of ton of (small Telgis). Infact, 2 months past, town Crime Branch (CCB) raided few of the Sub-registrar offices and Taluk workplace and have engaged thirty eight illegitimate franking, out of that twenty one cases in town Civil Court premises and therefore the rest at mayonnaise Hall, Yelahanka, Peenya, Yeshwanthpur, Koramangala and Jayanagar and in remission nearly forty seven agents for having concerned within the circulation of pretend stamp papers and franking ink and pads, seals and franked blank sheets were additionally condemned . These faux papers square measure either franked from their own franking machineries or from the first stamp papers, they're exploitation color zerox. folks ought to approach the authorised Sub Registrar offices to induce the stamp paper decorated on the typewritten text before signature.
For More:
Property Registrations
All documents don't need registration mandatorily. The Transfer of Property Act, 1882 and also the Indian Registration Act, 1908 have created registration of sure documents obligatory while in respect of sure different documents it's nonmandatory.
According to section 17 of the Indian Registration Act, 1908 registration of documents is obligatory if they relate to an immoveable property. Similarly, Section 54 of Transfer of Property Act 1882, stipulates that sale of immoveable property the worth of that is 100 rupees or additional ought to be registered. Since no immoveable property is accessible for rupees one hundred or but a pair of. rupees one hundred, implicitly all sale deeds of immoveable property would like obligatory registration.
Compulsorily registerable Documents:
Section 17(1) of Indian Registration Act 1902, deals with the documents that need registration mandatorily.
They include:
1.Instruments of gift of immoveable property:
Gift is given by the donor to the beneficiary with none financial thought, however solely in thought heart} and affection the donor has towards the beneficiary. Therefore, gift deeds transferring immoveable property of the worth of Rs.I00/- and higher than would like registration.
2. different non-testamentary documents that purport to form, assign, limit or extinguish the proper, title and interest in immoveable property the worth of that is over 100 rupees would like registration.
3. A eleven non-testamentary documents that acknowledge the receipt or payment of any thought on account of the transactions referring to the creation of any right, title, interest within the immoveable property would like registration.
All non-testamentary documents transferring or assigning any decree or order, award of a court, that have an effect on the proper, title and interest in immoveable property the worth of that is one hundred rupees and higher than. would like registration The documents could produce, extinguish, assign, declare, limit or prohibit the proper, title and interest within the immoveable property for the current or future, however if the worth of such immoveable property is one hundred rupees or additional, the deed has to be registered.
Though all kinds of mortgages would like registration, mortgage created by depositing of title deeds, referred to as just mortgage, isn't mandatorily registerable. Mostly, banks and money establishments use this mode of mortgage. However, memo of deposit of deed desires registration.
Section 107 of Transfer of Property Act 1882, prescribes that lease of immoveable property from "year to year" or for any term extraordinary one year or reserving a yearly rent should be done solely by a registered instrument. The phrase from 'year to year', refers to a continual lease from year to year, that is, wherever the owner has no choice to terminate the lease at the tip of the year rapidly.
Similarly the phrase, "reserving yearly rents" implies that the lease has no definite amount, however the annual rent is set. The word "yearly" implies that the lease ought to run year once year or a minimum of over a year. In general, any lease in way over one year and higher than ought to be registered.
Documents wherever registration is optional:
There area unit sure documents registration of that is nonmandatory. Section eighteen of the Indian Registration Act, 1908 lays down the instruments of that registration is nonmandatory.
They include:
a] Instruments about transfer of an immoveable property, the worth of that is a smaller amount than rupees one hundred;
b] Lease of an immoveable property for a term not extraordinary one year;
c] Wills
d] Deed of gift of property valued at but Rs.100/-
Time limit for registration:
Under Section twenty three of the Registration Act, subject to sure exceptions, any document apart from a can has got to be bestowed for registration at intervals four months from the date of its execution. Execution suggests that language of the document.
If a document isn't bestowed for registration at intervals the prescribed amount of 4 months and also the delay in presentation of the document doesn't exceed an additional amount of 4 months, then the parties will apply to the Registrar for registration of the document World Health Organization could direct, upon payment of a fine not extraordinary 10 times the particular registration fees, for registration of such a document.
A document about an immoveable property may be dead out of Republic of India|Bharat|Asian country|Asian nation} and later it may be bestowed for registration in India. As per section twenty six of the Registration Act, 1908, if a document purporting to own been dead by all or any of the parties out of Asian country is bestowed for registration at intervals the prescribed amount of your time, the Registering Officer could, on payment of correct registration fee settle for such document for registration if he's glad that the instrument was dead out aspect Republic of India|Bharat|Asian country|Asian nation} and also the instrument has been bestowed for registration at intervals four months once its arrival in India.
Enquiry by the Registering authority:
The Registering Officer is authorized below sec. thirty four of the Registration Act to enquire whether or not or not the person is that the same by whom it purports to own been dead such a document. He could enforce production of proof for his identity and just in case anyone is showing as a representative or agent, the Registrar could kindle relevant documents to indicate that the agent or representative has the proper to look on behalf of his principal.
Effect of non-registration:
What would be the repercussion if a document that is mandatorily registerable isn't registered?
Section forty nine of Indian Registration Act deals with this example. It states clearly that such un-registered documents don't convey to the transferee a lawfully valid title and such documents aren't admitted as proof for any dealings moving the property noted within the document. However, there's an exception provided within the Act. The unregistered documents is also admitted as proof in a very suit for execution below Specific Relief Act.
Documents area unit in the main registered for conservation of proof, assurance of title, and to assist an intending emptor to grasp if the title deeds of a selected property are deposited with any establishment or person for purpose of getting loan or advance against security of the property.
Registration of documents acts as notice to the general public and to shield themselves against the seemingly fraud. Therefore, it's wise to register all documents connected with the immoveable property no matter whether or not the registration is obligatory or not because it creates a permanent record of event that area unit mirrored in encumbrance certificates.
As registered documents have higher worth of proof than unregistered documents it's continually useful to you if you get all of your property documents registered at intervals the stipulated amount no matter the actual fact that such registration is necessary or not.
