Q1. How to cancel or terminate Leave and License Agreement or Registered Rent Agreement?
Ans: Once the Leave and License Agreement (Registered Rent Agreement) is executed and approved by the Sub-registrar, there are basically four different ways to cancel or terminate a Leave and License Agreement or Registered Rent Agreement.
The following are the 4 different methods of cancelling a Leave and License Agreement:
1. Automatic Termination:
As the name suggests, the agreement gets terminated automatically after the end of the Lease period. For example, the term of the leave and license agreement is for 12 months, then the agreement automatically expires at the end of the period of 12 months.
To elaborate more, say the beginning (commencement) date of the Registered Rent Agreement is: 11-01-2016 and the agreement has a term of 12 months, then the Leave and License Agreement expires automatically on: 10-01-2017
2. Notice by either parties:
The second method for termination of a Registered Rent Agreement (Leave and License Agreement) is by the standard clause of Termination already available in the Agreement. This method of cancellation of the Leave and License Agreement is applicable, when the agreement is to be cancelled/terminated before the end/expiry of the Lease period.
Here any of the parties (Licensor/Licensee or Owner/Tenant) can send a notice of termination to the other party for cancellation of the Agreement. The agreement ceases after the end of the notice period. Generally, the period of notice as per the standard clause in the Leave and License Agreement is 1-2 months.
3. New Registered Rent Agreement:
Incases, where there is already an existing Leave and License agreement and in its place a new Leave and License Agreement is executed for the same property, within the same Lease period, the old Leave and License Agreement is again automatically relinquished and replaced by the new one.
4. Registration of Cancellation deed:
The above three procedure of Termination may or may not require any Legal Fees. However, in this method, there is a mandatory payment of Stamp Duty and Registration Fee.
This method of cancellation of Leave and License Agreement is known as the registration of cancellation deed.
The procedure involves the following steps:
1. Payment of Stamp Duty & Registration Fee to the Government.
2. Draft creation – with passport size photographs & signatures of all the parties (owner and tenant).
3. Submission to the Registrar Office.
4. Final Stamp of Approval by the Sub-registrar.
5. Collection of the executed deed from the Sub-registrar office.
The procedure for registration of this deed is very similar to that of registration of a Leave and License Agreement.
Q2. What are the differences between all the methods of Cancellation of Registered Rent Agreement above? Which method is more feasible?
Ans: All the above methods of cancellation serve the same purpose of termination of registered rent agreement. However, the basic difference in all the methods above is the involvement of Government fee, which is applicable while preparing the cancellation deed (4th Method).
Its totally at the discretion of the parties, to choose the method which serves them the best. Its suggestible to prepare a cancellation deed where the tenure, and License fee is high. This is so as to have a more secured understanding and record that the Leave and License Agreement along with the clauses has been terminated with the approval of the Government.