An Immovable property in India has several interests and rights such as right of way, rights to extract gold, silver and other mines, easement right etc. One such right created in the immovable property is a lease. A lease is a transfer of right of enjoyment of an immovable property for a certain period, in consideration of the price paid given periodically on specific occasions to the Transferor by the Transferee. Lease has been defined under section 105 of the Transfer of Property Act, 1882 (“TOPA”). Thus, the essential elements of a Lease are- (i) The Parties i.e. the transferor and the transferee, (ii) the demise i.e. the right to enjoy the property, (iii) the term i.e. the duration, and (iv) the consideration i.e. the premium or rent.

A lease must be distinguished from a license. Under Section 52 of the Indian Easements Act, 1882, a license is merely a right to do something upon immovable property of another which would otherwise be unlawful, but such right does not amount to an easement or an interest in the property. The key distinction is that a lease creates an interest in the property, whereas a license is only a personal permission. In substance, if the occupant is given exclusive possession for a term and a legal right to enjoy the premises, the arrangement is more likely to be treated as a lease. If the owner retains control and merely permits use under limited conditions, it is more likely to be a license.

In the absence of a contract or local law or usage to the contrary, a lease for an immovable property for agriculture or manufacturing purposes shall deemed to be a lease from year to year, terminable on the part of either the lessor or the lessee by giving due notice of 6 (six) months. The lease to an immovable property for any other purpose shall deemed to be a lease from month to month, terminable on the part of either the lessor or the lessee by giving due notice of 15 (fifteen) days. Unlike a leave and license, registration of a lease deed beyond a period of 12 (twelve) months is compulsory under the Registration Act 1908. Further, leases can be executed for longer periods.

Section 108 of TOPA enumerates the respective rights and liabilities of the lessor and lessee, in the absence of a contract or local usage to the contrary. The lessor is generally bound to disclose latent material defects in the property, put the lessee in possession, and allow the lessee peaceful enjoyment so long as rent is paid and covenants are observed. The lessee, on the other hand, is bound to disclose facts materially increasing the value of the lease, pay rent at the proper time and place, maintain the property as a person of ordinary prudence would, and return possession upon determination of the lease. 

The lessee also has certain important rights, such as the right to enjoy the property during the lease term without interruption, the right to derive profits from the property unless restricted, and, in some cases, the right to remove things attached to the earth during the continuance of the lease, provided this is done while still in possession and subject to the contract. These statutory incidents are often modified in modern leases through detailed contractual clauses dealing with repair obligations, fit-outs, common areas, taxes, utilities, insurance, subletting, indemnities and restoration obligations.

Though the Transfer of Property Act provides the general legal framework, commercial practice in India reflects many functional categories of leases. Residential leases are common for apartments, villas and houses. Commercial leases cover shops, offices, co-working spaces, showrooms and malls. Industrial leases relate to factories, warehouses, logistics parks and manufacturing facilities. Long-term land leases are frequently used in infrastructure, institutional, SEZ and government-allotted property matters. In urban transactions, parties also use hybrid structures such as leave and license arrangements, fit-out agreements, lease-cum-license structures, and agreements for lease pending completion of construction. These operate within the wider statutory framework but are shaped heavily by contract. 

Thus, a lease of immovable property in India is a transfer of the right to enjoy property for a term in return for consideration, while ownership remains with the lessor. Its legal foundation lies principally in Sections 105 to 117 of TOPA, read with the Registration Act and stamp laws.