A license is a personal right granted to a person to do something upon immovable property of the grantor and does not amount to the creation of interest in the property itself. It is purely a permissive right and is personal to the grantee. It creates no duties and obligations upon the persons making the grant and is, therefore, revocable except in certain circumstances expressly provided for in the Act itself.
The license, when granted, has not other effect to confer liberty upon the licensee to go upon the land which would otherwise be lawful.Under license agreements, the legal ownership and the possession of the property remain with the licensor.
Under a lease agreement, the tenant generally has exclusive possession with respect to the property. In other words, a license does not create any interest in the premises in favor of the licensee.
A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Primary distinctions between Lease and Licence:
1. A lease is a transfer of an interest in a specific immovable property, while licence is a bare permission, without any transfer of an interest.
2. A lease creates an interest in favour of the leassee with respect of the property, but a licence does not create such an interest.
3. A lease is both transferable and heritable, a sub tenancy can be created by the tenant and on the death of the tenant, the tenancy can be inherited by his/her legal heir, whereas, licence is neither transferable nor heritable.
4. A licence comes to an end with the death of either the grantor or the garantee, since it is a personal contract, but a lease does not comes to an end on either the death of the grantor or grantee.
5. A licence can be withdrawn at any time at the pleasure of the grantor but the lease can come to an end only in accordance with the terms and condition stipulated in the contract of tenancy agreement.
6. A lease is unaffected by the transfer of the property by sale in favour of a third party. It continues and the purchaser has to wait till the time period for which the tenancy was created is over before he can get the possession, whereas, in case of a licence, if the property is sold to a third party, it comes to n end immediately.
7. A lessee has a right to protect the possession in his own right. Whereas, a licencee cannot defend his possession in his own name as he does not have any proprietary right in the property.
8. A lessee in possession of the property is entitled to any improvements or accessions made to the property, while a licencee is not. License does not allow any interest in the premises on the licensee's part. It merely gives the licensee the right to use and occupy the premises for a limited duration.A lease deed needs to be stamped and registered. The amount payable towards the lease deed's stamp duty is more than that payable towards the Leave and License's. For a period exceeding three years, the stamp duty is same for both agreements.