What each one settles in a leave and licence agreement, and the wording that shifts the risk.
Licence Period and Renewal
Why it matters. This clause defines the exact duration of the right to occupy and whether the arrangement can be extended. It distinguishes a licence from a lease and determines the stability of the occupant's stay.
Watch for. A term that is too short or a renewal clause that is entirely at the licensor's discretion may leave the licensee without a home on short notice. An automatic renewal provision, conversely, may inadvertently lock the licensee into a longer commitment than intended.
Licence Fee and Security Deposit
Why it matters. This sets the monthly consideration and the refundable deposit, which is often a significant sum. It governs the financial relationship and the conditions for getting the deposit back.
Watch for. Clauses that allow the licensor to adjust the licence fee arbitrarily during the term or that permit blanket deductions from the security deposit for vague reasons like 'routine wear and tear' can be financially punitive.
Termination and Revocation
Why it matters. This clause states the grounds on which the licence can be cut short by either side. It controls the notice period and the consequences of early exit.
Watch for. A clause allowing the licensor to terminate immediately for any breach, however minor, or without any stated cause, gives the licensee no time to remedy a situation or find alternative accommodation. A very short notice period for the licensee but a long one for the licensor is also a sign of imbalance.
Use of Premises
Why it matters. This defines what the occupant can and cannot do on the property, including restrictions on commercial use, number of occupants, and keeping pets. It sets the boundaries of permissible conduct.
Watch for. Overly restrictive wording that prohibits guests from staying overnight or that bans common household activities may make daily life difficult. A clause that allows the licensor to unilaterally change the use rules after signing is worth questioning.
Possession and Handover
Why it matters. This clause details the condition of the property at the time of entry and the standard to which it must be returned. It is the basis for any dispute over the security deposit.
Watch for. If the agreement does not require a joint inventory of fixtures, furniture, and existing damage at the start, the licensee may be held responsible for pre-existing issues. A handover clause that demands the property be returned in a 'new' condition is unreasonable.
Licensor's Right of Entry
Why it matters. This clause states when and how the licensor can enter the premises. It balances the licensor's right to inspect the property against the licensee's right to privacy and quiet enjoyment.
Watch for. A clause that permits entry 'at any time' without prior notice or consent effectively nullifies the licensee's exclusive possession. The wording should require reasonable prior notice, except in a genuine emergency.
Indemnity
Why it matters. This clause determines who bears the cost if something goes wrong, such as property damage or injury to a third party. It can create a significant financial liability for the licensee.
Watch for. A one-sided indemnity that makes the licensee liable for all losses, including those caused by the licensor's own negligence or a structural defect in the building, shifts an unfair burden onto the occupant.
Dispute Resolution
Why it matters. This clause specifies how disagreements will be resolved—through negotiation, mediation, arbitration, or court litigation—and which city's courts will have jurisdiction.
Watch for. An arbitration clause that appoints a specific arbitrator connected to the licensor, or a jurisdiction clause that requires the licensee to travel to a distant city for any legal proceeding, can make enforcing one's rights practically difficult and expensive.