Difference Between License and Lease

License vs Lease

The concept of a lease and a license may be quite confusing for some. By definition, a lease temporarily grants the right to a certain property for a particular term while a license is giving someone the right to perform or do something to a property that is originally not allowed or prohibited in the absence of such license. The first is the one that generates a sense of interest in the grantor’s property whereas the latter just gives due permission of usage of the property so there’s no interest in the said property. In addition, according to the Indian Easement Act (Sec. 52) a license can give a right not only to a single person but also to a group of individuals.

Based on the Transfer of Property Act (Sec. 105), a lease enables the lessee to enjoy the immovable properly of the lessor. The agreement can be implied or expressed and can be enjoyed for the longest time allowable based on the promise made, price paid, or service that is rendered from time to time or in a given circumstance to the transferor who has accepted the terms of the agreement.

If it’s either a lease or a license, it should be made enforceable in writing most especially if the agreement is longer than one year. Other types of licenses are for the short-term like in the case of oral agreements making it easily revocable by the grantor’s will. A good example is when you give an “oral license” to your friend that he can practice using your motorbike in your driveway, but then after an hour you just say (for some reason) “Keep your hands off my property!”
In the real estate industry, another example to grasp the difference between the two is this – when you are granted a lease for a condominium unit, then you can occupy that unit for as much time as you want, as if you actually own it, depending on the agreed terms between you as the tenant (like the lessee) and the owner (like the lessor). Now, if you are granted the license to use the pool of that condominium complex, then you have been granted the permission to use the pool, but you cannot exclude others most especially if they also have been given the license or right to use the amenity (not exclusive).

Summary:

1.Transfer of interest is absent in a pure license agreement unlike in leases.
2.A license can easily be revoked unlike in the case of a lease.
3.A lease grants the lessee the right to possess a property exclusively while a license grants you a right of usage of the property (non-exclusive) since its legal ownership is still with the original licensor.
4.Where a license is not transferable, a lease has a transferability feature.

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