Temporary Stays, Lasting Questions - Lease Vs. License In Airbnb Rentals

Author: LawSphereX

Category: Property & Real Estate

Published: 2026-08-23T21:12:45.328696+00:00

Updated: 2026-08-26T17:06:03.912+00:00

TEMPORARY STAYS, LASTING QUESTIONS: LEASE VS.

LICENSE IN AIRBNB RENTALS

Aayush Ahuja, O.P. Jindal Global University, Jindal Global Law School

ABSTRACT

This paper examines the legal nature of Airbnb accommodations in India, analyzing whether they align more closely with lease or license agreements. It begins by exploring the distinctions between leases and licenses under Indian law, emphasizing the importance of intention, substance, and exclusive possession in classifying agreements. The paper also evaluates Airbnb’s terms of service, judicial precedents, and comparative approaches in other jurisdictions to assess the rights and obligations of parties involved in Airbnb bookings. While Indian courts prioritize the intention of the parties, the unique characteristics of Airbnb stays, such as long-term occupancy and exclusive possession, complicate this determination. The paper concludes that, given the judiciary’s current emphasis on intention, most Airbnb arrangements in India are likely to be classified as licenses.

It highlights the need for legislative clarity to address ambiguities in the legal treatment of longer stays and ensure balanced protections for both hosts and guests. Keywords: Airbnb, Lease, License.

Introduction: In recent years, Airbnb has transformed the accommodation sector, becoming a popular choice for travelers who value convenience, cost-effectiveness, space, and privacy. This platform offers a unique, authentic experience that differs significantly from traditional hotels, which often feel standardized. Airbnb stays can be especially appealing for larger groups or longer visits, as they tend to be more budget-friendly, and the freedom and flexibility provided align well with the needs of modern travelers. As a result, India has emerged as one of the fastestgrowing markets for Airbnb,1 where its affordability and ease of booking make it a favored option. Despite these advantages, the legal implications of staying in Airbnb accommodations are frequently overlooked by guests.

While these arrangements may initially resemble hotel stays – typically governed by license agreements – a closer look reveals that some may actually align more closely with lease agreements. Understanding the distinction between a license and a lease is crucial, as the rights and obligations of occupants vary significantly between these two types of agreements. Airbnb bookings often extend beyond the short stays typical of hotels, with guests sometimes residing for a month or more. This trend is driven by the convenience and home-like experience Airbnb offers, eliminating the need to search for long-term housing or negotiate rental terms. Unlike hotels, many Airbnb stays come with responsibilities such as paying utility bills, and often, the host hands over the keys, leaving the property to the guest without further interaction unless there is an emergency.

2 In these cases, particularly with long-term stays, the arrangement can begin to resemble a lease, where the property owner relinquishes control to the guest, similar to a landlord-tenant relationship. This distinction has significant implications. If an Airbnb stay is classified as a lease, the occupant is entitled to the rights granted under the tenancy laws of the respective state. This would mean that, in the case of eviction, the owner would be required to follow the formal eviction procedures specified under applicable tenancy laws, which differ from the more flexible regulations governing hotel stays through license agreements. 1 ‘India among fastest-growing markets with potential to be among top 10: Airbnb CBO’ (The Economic Times) 2 I experienced this firsthand when I booked an Airbnb in Delhi for a month and a half during my internship.

This paper will explore whether home stays booked via Airbnb are more accurately classified as leases or licenses. Several factors will be taken into consideration, such as whether the host provides additional services (e. g. , cleaning), retains access to the property during the guest’s stay, and how the arrangement is described in the agreement. Ultimately, the classification will depend on the specific facts and circumstances of each case, which this paper will examine in depth. Lease v License: The Difference Under “Section 105 of the Transfer of Property Act, 1882”3 (hereinafter TPA), “a lease is defined as the transfer of a right to enjoy a property for a specified period, either expressly or impliedly, or even indefinitely.

This transfer is in return for consideration—such as money, a share of crops, services, or any other valuable item—provided periodically or on agreed occasions by the transferee, who accepts the terms of the transfer. ”4 Importantly, a lease grants the lessee a transferable interest in the property, creating a right in rem,5 or a right enforceable against the entire world. 6 In contrast, a license is defined under “Section 52 of the Indian Easements Act, 1882. ”7 “A license is created when the owner grants someone else the right to do something on their property that would otherwise be unlawful, without transferring any interest in the property itself. ”8 A license simply permits use without conveying any tenancy rights or interest in the land. The difference between these concepts is subtle but significant.

In a lease, the lessee receives an interest in the property, granting them exclusive enjoyment rights against everyone, including the owner. For example, when you rent a house, you gain a legal right to enjoy that property independently of the owner. In contrast, a license merely permits use of the property without transferring an interest, as with a hotel room. In this case, you are granted temporary access to the space without tenancy rights. Because of this difference, a licensee may be evicted without notice,9 unlike a tenant in a lease agreement. 3The Transfer of Property Act 1882, s 105 (TPA 1882).

4 ibid.

5 Mulla Dinshah Fardunji, The Transfer of Property Act, 1882 (12th edn, Lexis Law Pub 2000) 769.

6 ibid.

7 The Indian Easements Act 1882, s 52 (IEA 1882).

8 ibid.

9 Mulla (n5) 792.

Airbnb’s Terms of Service: Substance over Form? Now that we understand the difference between a lease and a license, it’s essential to examine Airbnb’s terms of service to assess the legal implications for customers who book home stays through the platform. Specifically, we need to consider whether the terms used in Airbnb’s agreements reflect the actual legal nature of the home stay arrangements. Clause 8. 1 of Airbnb’s terms of service10 stipulate that a confirmed booking is a limited license granted to the occupier by the host and that the host retains the right to re-enter in accordance with the applicable law, and the agreement between the occupier and the host. 11 Clause 8. 2 stipulates that the granted license lapses if the occupier stays past the agreed upon checkout team without the consent of the host.

12 The key question here is whether labelling the arrangement as a license conclusively determines its nature. In Associated Hotels of India v R. N. Kapoor13, the Supreme Court emphasized that the substance of an agreement should take precedence over its form when determining whether it constitutes a lease or a license. Thus, even though Airbnb’s terms label the agreement as a “license,” if the nature of the stay arrangement aligns more closely with a lease, occupants will qualify for protections under state tenancy laws. This is where ambiguity in Airbnb’s regulation arises. This paper will now explore the test established by the judiciary to determine the nature of an agreement and will apply it to assess whether Airbnb home stays could fall under lease or license classifications. Intention, Substance or Exclusive Possession?

The judiciary has established that the primary test for determining the nature of an agreement is the intention of the parties. 14 For example, if you book an Airbnb and enjoy exclusive possession of the property without assistance from the owner, this alone does not entitle you to tenancy protections. Instead, the intention behind the agreement takes precedence over the fact of exclusive possession. If both parties intended to establish a license rather than a lease, the arrangement remains a license.

10 ‘Terms of Service’ (Airbnb | Holiday rentals, cabins, beach houses & more) clause

8.1

11 Ibid.

12 ibid clause 8.2.

13 Associated Hotels of India v R.N. Kapoor AIR 1959 SC 1262.

14 Puran Singh Sahani v Sundari Bhagwandas Kriplani 1991 2 SCC 180; Associated Hotels (n 13).

In other common law jurisdictions, exclusive possession often plays a more decisive role. In Australia, for instance, the case Swan v Uecker [2016] VSC 313 15involved tenants listing their rented property on Airbnb, advertising it as an entire premises or single-room rental. Their lease with the landlord prohibited subletting, yet they argued that an Airbnb booking constituted a license, not a sublease. Despite Airbnb’s terms describing stays as licenses, the court held that offering the entire property with exclusive occupant possession amounted to a lease. 16 Similarly, in a 2014 San Francisco case, an Airbnb guest who overstayed and ceased rent payments was found to be covered under California’s tenancy laws,17 requiring the landlord to follow formal eviction procedures. In India, however, courts emphasize intention over exclusive possession. In Puran Singh Sahani v.

Sundari Bhagwandas Kriplani18, the court ruled that despite the appellant’s exclusive possession, the agreement indicated neither party intended to create tenancy rights. Here, the intention of the parties outweighed the exclusive possession test. Likewise, in Rajbir Kaur v. S. Chokesiri and Co. ,19 the court considered both substance and form, i. e. the intention of the parties alongside the legal implications arising out of the arrangement exclusive possession, to interpret the agreement. Therefore, when determining whether an agreement constitutes a lease or a license, Indian courts prioritize the intention of the parties while also considering exclusive possession and the substance of the agreement as supporting factors.

Application: Since the Indian judiciary prioritizes the intention of the parties over other factors, the outcome in India regarding Airbnb arrangements can be very different from other common law jurisdictions. But how is intention determined? One factor that may indicate intention is the period of occupation. Under Section 106 of the TPA,20 leases without specified terms are generally treated as month-to-month for nonagricultural and non-manufacturing leases. Therefore, even if an Airbnb stay is short-term, this

15 Swan v Uecker 2016 VSC 313; Swannie, Bill, Airbnb and Residential Tenancy Laws: Do 'Home Sharing'

Arrangements Constitute A Licence or a Lease? (2018). Adelaide Law Review, Vol. 39, 2018, Available at SSRN: https://ssrn.com/abstract=3382031 or http://dx.doi.org/10.2139/ssrn.3382031.

16 ibid.

17 Swannie (n 15).

18 Puran Singh (n 14).

19 Rajbir Kaur v S. Chokesiri and Co 1989 1 SCC 19.

20 TPA 1882, s 106.

alone doesn’t legally prevent the agreement from being classified as a lease. However, the duration is often relevant in understanding the parties’ intention. Additional factors that signal intention might include responsibilities like paying utility bills (for electricity, water, gas), as well as any services provided by the host, such as cleaning or laundry. When these factors align with the substance of the agreement, they help reveal the intended nature of the arrangement. However, the emphasis on intention makes it unlikely for an Airbnb booking to be classified as a lease. For example, when users book an Airbnb, they usually do so knowing it’s a temporary arrangement that won’t confer tenancy rights—more akin to a hotel stay.

Contrast this with an app like NoBroker, which is designed for leasing property; users generally understand that an arrangement through NoBroker involves a lease, not a short-term license like Airbnb. This awareness, combined with Airbnb’s terms of service, reinforces that Airbnb bookings are viewed as licenses rather than leases. Homeowners benefit significantly from classifying Airbnb arrangements as licenses rather than leases, as a license bypasses the restrictions imposed by tenancy laws. Consequently, when a booking is made through Airbnb, it’s reasonable to assume the homeowner has no intention to form a landlord-tenant relationship. Take for example in the Puran Singh21 (supra) case, where an 11-month agreement was structured specifically to exclude tenancy rights, even though the tenant had full property access and paid all expenses.

The court found that the agreement was a license, not a lease, because both parties had intended it as such. If the court applies the same reasoning to Airbnb arrangements, emphasizing the intent to create a temporary, license-based relationship, Airbnb stays would likely be viewed as licenses. This shared understanding between guests and hosts about the temporary nature of an Airbnb stay aligns closely with the legal concept of a license rather than a lease. Conclusion: Given the approach of the Indian judiciary, it is highly probable that if cases regarding Airbnb arrangements arose, courts would lean towards classifying them as licenses rather than leases. Even if an occupier argues that their intent was to form a lease, proving this could be challenging, as most evidence would likely be circumstantial or limited to correspondence with

21 Puran Singh (n 14).

the host. However, this doesn’t leave occupiers without options, as they can still approach consumer courts for grievances related to home stays. 22 The lack of literature on the classification of Airbnbs in India highlights the need for more clarity. The emphasis on intention in determining the nature of an agreement makes it difficult for Airbnb arrangements to be considered leases. Should courts wish to take a different approach, they would need to distinguish Airbnb cases from established precedents to sidestep the intention element on a case-by-case basis. Alternatively, legislative intervention could provide clearer guidelines. For instance, a law could specify that longer Airbnb stays, combined with minimal owner interference, may constitute leases, with established thresholds to guide such classifications.

22 ‘Consumer Court slaps ₹5K penalty on Airbnb for accidental injury to infant’ (Bar and Bench - Indian Legal news)