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According to Transfer of Property Act, Section 105, Lease is defined as a handover of a right to claim property, land or estate for a particular period of time or in permanence. Owning a lease comes with the respect of an amount paid or agreed upon, a share of commodities (or any other form of supplies), service and any valuable payback. This share is redeemed periodically or during certain occasion from the leaseholder to the lessor as per agreement. In order to understand ‘lease’, one should first come to realize the below terms:

  • Lessor the lease provider (property owner) will have complete authority over the property which is then handed over to the lessee
  • Lessee the lease holder who obtains the entitlements to make use of and possess the property on contract from the Lessor
  • Duration the period of time against which the lessee possesses the property rights is also known as ‘duration’.
  • Premium or Rent is the amount or share required for permitting the rights to use and utilize the estate and paid periodically or at one time (as per the agreement). This amount/kind is also paid in intervals hence called rent.

The lease agreement is basically a contract between a lessor or landlord and a lessee or tenant in a written format which indicates that the lessor will get a periodic payment from the tenant in exchange of allowance for using and occupying his property.

A lease agreement is usually required when a property is leased for a long span of time period which generally ranges between 1 to 5 years or longer than that. In such kinds of cases, a lease agreement plays a vital role to govern the equation between the landlord and the tenant and also implements the provisions that bind them legally.

An expert documentation lawyer should draft a lease deed. He can understand the requirements of both the parties and henceforth draft an unbiased agreement to protect the interest of the landlord as well as the tenant

Difference between Lease and Sale



The tenant is able to enjoy only the rights to use the property.In this case, the buyer gets the whole right of ownership of a property.
Except on the condition of perpetuity, the lessee rights to process the property comes to an end once the lease is terminated.There is no limit for usage of the property.
The money is paid like a premium or on specific intervals.The cost of the property is paid one time.
The lessee can only enjoy the use of the property. A transfer of lease is allowed in most cases though the ownership rights to the property lies with the lessor.Buying a property allows the buyer to enjoy the freedom selling the property in future.
A lease is much cheaper.The purchase amount is higher than the lease cost of the same property.
The lessee cannot have the residual value of the property.The residual value of the property can be transferred to the buyer.
The documents of the lease are known as lease agreement or deed of the lease.Sales generally involve agreement of sell, deed of conveyance, sale deed etc.

Key Contents of a Lease Deed in India

There are certain important provisions that should be included in every lease agreement in India are as follows-

  • Description of Property: The deed should contain the description of the property such as area, location, structure, address, and other information.
  • Duration: The lease agreement should clearly state the time span for which the validity of the lease will be in force. This provision might also include the information about the renewal of lease deed in case the parties want to continue with the contract.
  • Rent, Maintenance, and Security: The lease deed must clarify the rent amount, payment mode, due dates, security deposits, interest for payment delay etc. It should include the information regarding the maintenance charges, society charges and utility bills etc.
  • Termination of Lease: The deed must indicate or include the reasons behind the termination of the agreement. It might include breach of the deed, illegal acts in the property, failure to pay the rent, nuisance created by the lessee etc.
  • Subletting: The lease deed must include the information about whether the tenant is able to sublet the property or not.
  • Dispute Resolution: It must be mentioned in the deed that the menner in which the legal dispute arising between the parties out of breach of the agreement and how it will be dealt with. It may consist ADR process such as Arbitration.
  • Applicable Laws: In this provision it will be stated that the laws which are applicable over both the parties in case of dispute and which court will be having the jurisdiction to deal with such cases.

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A lease deed is an agreement where the tenant has agreed to pay a periodic rent to the landlord

If the leasing period is more than 12 months, registration of lease agreement is mandatory according to the Registration Act, 1908. If an agreement is registered then stamp duty and registration fee is applicable and needs to be paid.

Although the term rent and lease are synonymous in nature renting a property is not akin to leasing a property. A rent agreement can either be a lease or a license. It will be treated as per the terms and conditions and renting period mentioned in the agreement.

Registration constitutes notice of the lease to all parties and all purposes. If not registered it means that it has not given the notice. The consequence is that a landlord may not be able to recover unpaid rent from the guarantor if the tenant fails to pay.

The provisions of the Transfer of Property Act of the Indian Govt. overviews the procedure of the Lease Agreement procedures in the country.