A leave and license agreement is a written agreement between the landlord and the tenant wherein the landlord gives the right to use his/her property to the tenant for a specific period. This type of agreement is usually signed for a short period, typically six months to a year. It is essential to register the leave and license agreement to avoid any legal disputes between the landlord and the tenant. However, there are instances when the landlord and the tenant do not register the agreement.
When a lease agreement is not registered, it loses its validity in the eyes of the law. Therefore, the rights and obligations of both the landlord and tenant become unclear. This means that in case of any dispute, the court will not recognize the agreement as the legal document governing the lease agreement. Here are some of the consequences of not registering a leave and license agreement:
1. Absence of Legal Proof – When an agreement is not registered, both the landlord and tenant lose their legal standing to prove their claims. This means that in the event of any legal dispute, either party cannot produce the agreement in court as evidence.
2. No Protection – An unregistered agreement can offer no protection to either the tenant or landlord. The parties are thus vulnerable to unfavourable legal judgments.
3. Risk of Fraud – If a landlord does not register the agreement, he/she can be accused of fraud. This is because there is no legal record to prove that the tenant is living in the property or that the landlord agreed to rent the property to the tenant.
4. Limited Rights – A landlord who fails to register an agreement can only avail of the relief that is available under the Indian Contract Act of 1872. This law does not confer the same rights as those granted by the Rent Control Act, which applies when there is a registered agreement.
5. Financial Implications – If a landlord chooses not to register the agreement, he/she may be liable to pay penalty fees. These fines can range from Rs. 500 to Rs. 5000, depending on the duration of the non-registration.
In conclusion, it is essential to register a leave and license agreement to avoid any legal consequences that may arise from a dispute between the landlord and the tenant. While there are several implications of not registering the agreement, the most significant is that the parties lose their legal standing in a court of law. This article highlights the importance of registering a leave and license agreement and serves as a reminder for landlords and tenants to adhere to the applicable laws of their state.