Paying Guest Agreement India: Section 52 Easements Act

In Indian law a paying guest arrangement is a licence, not a lease. The owner grants a personal permission to use part of the premises, typically a bed in a shared room with access to a dining area, a bathroom and common spaces, while legal possession and control stay with the owner. A lease under Section 105 of the Transfer of Property Act 1882 transfers an interest in immovable property; a licence transfers nothing. The licensee cannot sublet, cannot bring in another occupant and, under Section 56 of the Indian Easements Act, cannot pass the permission to anyone else. Meals, laundry, Wi-Fi and cleaning are usually bundled into one licence fee, and courts treat that bundle as a strong sign that the occupant is a guest rather than a tenant.

The closest relative is the 11-month leave and licence agreement for a whole flat, which rests on the same Section 52 but hands an entire unit to one licensee. A PG agreement is narrower. The owner or a warden stays on site, the room may be shared with strangers, entry hours and visitors are regulated, and the owner keeps a key to every room. Once the occupant takes exclusive control of a self-contained unit with no services, the arrangement starts to look like a tenancy, and a residential rent agreement drafted to the Model Tenancy Act 2021 becomes the correct instrument. The wrong choice rarely hurts at signature, only at exit.

The governing text is Chapter VI of the Indian Easements Act 1882, Sections 52 to 64, available in the official India Code text of the Indian Easements Act 1882 on licences. Section 52 defines a licence as a right to do something on another person's immovable property that would otherwise be unlawful, without creating any interest in it. Section 60 makes it revocable by the grantor. Section 63 gives the licensee a reasonable time to leave after revocation, and Section 64 entitles a licensee who paid for the licence and is evicted without fault to compensation. That is why a professionally drafted PG agreement fixes a written notice period.

Labels do not settle the question. In Associated Hotels of India Ltd v R.N. Kapoor (1959) the Supreme Court held that substance and intention prevail over the name given to the document, and in C.M. Beena v P.N. Ramachandra Rao (2004) it treated a deed styled as a licence as a lease because the occupant had exclusive possession. A PG agreement that hands over a lockable, self-contained unit with no services can be recharacterised as a tenancy, which pulls the State rent statute into the dispute.

The Model Tenancy Act 2021 is a model law that binds only the States that have enacted it, and even there its definition of premises excludes hotels, lodging houses, dharamshalas and inns. Registration is generally optional because Section 17 of the Registration Act 1908 targets leases, not licences, with Maharashtra as the main exception. Stamp duty remains payable under the Indian Stamp Act 1899 or the State stamp law. On tax, Entry 12A of Notification 12/2017-Central Tax (Rate), inserted by Notification 04/2024, exempts accommodation supplied for at least 90 continuous days within a per-person monthly ceiling. Operators who digitise residents' identity documents also fall within the Digital Personal Data Protection Act 2023, whose data fiduciary duties are being phased in under the 2025 Rules.

The classic case is a homeowner who converts spare rooms, or a whole floor, into PG accommodation near a college, a tech park or a hospital. Each resident signs individually, because a licence is personal and one occupant's default should never put the other beds at risk. The second frequent scenario is the student PG where the resident is seventeen or barely eighteen. A minor is not competent to contract under Section 11 of the Indian Contract Act 1872, and since Mohori Bibee v Dharmodas Ghose (1903) an agreement signed by a minor is void, so the parent or guardian must contract in their own name as the licence holder of record and pay the fee.

Professionals on a transfer or probation period use PG agreements for their first months in a new city, often with a short lock-in followed by a rolling monthly term. Co-living brands issue a standard PG licence for each bed, while an employer that books blocks of beds for trainees signs a separate corporate service agreement under the Indian Contract Act with the operator. One trap deserves attention: a tenant who runs a PG inside a rented flat without the landlord's written consent breaches the head lease, and the paying guests lose their beds when that lease ends.

• The identification of the parties records the licensor's and licensee's names, permanent addresses and identity particulars. For a minor resident, the parent or guardian signs as the contracting party, not as a mere surety, and Aadhaar details are captured in masked form only.
• The grant of licence describes the bed, the room and the sharing type (single, twin or triple), plus the common areas the licensee may use. It states in terms that possession remains with the licensor and that no tenancy is created.
• The licence fee and inclusions clause lists what the monthly fee covers: meals per day, electricity up to a stated usage, water, Wi-Fi, housekeeping and laundry. It separates the accommodation component from food and services, because only rent counts for a rent receipt used to claim the HRA exemption, and obliges the licensor to issue one each month.
• The security deposit clause expresses the deposit in months of fee and sets a refund deadline after checkout. Deductions are limited to unpaid dues and damage beyond normal wear, each supported by a written statement.
• The house rules schedule covers entry timings, visitors, overnight guests, cooking in rooms, smoking and alcohol, quiet hours and shared appliances. Breach of a material rule after one written warning is a stated ground for revocation.
• The notice period and lock-in clause gives both sides a written notice, commonly 15 or 30 days, and explains what happens to the deposit if the licensee leaves during the lock-in.
• The police verification clause obliges the licensee to supply identity proof, photographs and emergency contacts, and the licensor to file them with the local police station within the time set by the local order.

Maharashtra is the clearest case of compulsory registration for leave and licence arrangements, PG agreements included. Section 55 of the Maharashtra Rent Control Act 1999 requires the agreement to be in writing and registered, and places that duty on the licensor. If the owner fails to register, the licensee's version of the terms prevails unless the owner proves otherwise, and the owner faces a criminal penalty. Section 24 lets the licensor seek eviction before the Competent Authority once the licence expires and makes an overstaying licensee liable for damages at twice the licence fee, a remedy that works best on a registered written agreement. Stamp duty falls under Article 36A of the Maharashtra Stamp Act; registration can be completed online.

Karnataka regulates PGs mainly through municipal licensing. In Bengaluru, trade licence conditions for PG accommodation were set in August 2024 under Section 305 of the Bruhat Bengaluru Mahanagara Palike Act 2020, now enforced under the Greater Bengaluru Authority: CCTV on entries, exits and corridors with 90 days of storage, at least 70 square feet per occupant, fire safety clearance, a guard round the clock and an FSSAI licence where a mass kitchen operates. The trade licence caps the number of occupants, so our template records the licensed capacity of the room. Unlicensed PGs have already been sealed.

Delhi relies on police orders rather than a PG statute. Verification of tenants and licensees is required by orders of the Commissioner of Police, now issued under Section 163 of the Bharatiya Nagarik Suraksha Sanhita 2023, and disobedience is prosecuted under Section 223 of the Bharatiya Nyaya Sanhita 2023. The Delhi Police portal accepts registration online. Operators near North Campus or Laxmi Nagar should file for every new arrival, not in annual batches.

Tamil Nadu is the strictest State for PGs housing women. The Tamil Nadu Hostels and Homes for Women and Children (Regulation) Act 2014 requires every hostel or lodging house for women to hold a licence, and the Madras High Court upheld the Act against a constitutional challenge. Since the 2025 amendment to the rules, the application is filed online and the licence runs for ten years once the certificates are verified. Running a women's PG in Chennai or Coimbatore without it is an offence, so our template carries the licence number in the recitals.

You start by selecting the State where the PG is located. That choice sets the stamp duty guidance, the registration note for Maharashtra and the wording of the verification clause. You then enter the licensor's details and, if the building is itself rented, confirm that the owner has consented to PG use. The form next asks for the licensee's identity and whether the resident is under eighteen; if so, it switches the contracting party to the parent or guardian. The room section covers the sharing type, the bed number, the furniture inventory and the common areas included.

After that, you choose the services bundled into the monthly fee, the due date, the deposit in months and the refund window. The house rules arrive pre-filled from common practice, and you adjust timings, visitor policy and kitchen access to match the property. The last screen sets the lock-in, the notice period and the start date. The finished agreement downloads in Word and PDF, ready for e-stamping, signature before two witnesses and, in Maharashtra, online registration.

The most expensive mistake is a PG agreement that reads like a lease. Owners copy a rent agreement, call the resident a tenant, hand over the only key and omit the services, then discover in court that the occupant holds a tenancy under State rent law. The second is skipping police verification because the resident is a student or a friend's relative; the owner, not the resident, is prosecuted when the order is breached. The third is a vague deposit clause. "Refundable subject to deductions" invites an argument at every checkout, while a list of permitted deductions and a fixed refund date closes it.

Operators also overfill rooms beyond the licensed capacity, which gives the civic body grounds to seal the building and weakens any insurance claim. Residents make their own errors, the usual one being a cash deposit with no receipt. When an owner withholds a deposit without justification, the resident's first move is a written legal demand notice for recovery of the unpaid deposit before approaching the civil court or the consumer commission, since Section 2(42) of the Consumer Protection Act 2019 covers board and lodging. Collect only masked Aadhaar copies and store them securely, and never change house rules mid-stay by WhatsApp; a change that binds the licensee needs a signed addendum.