Should you choose a licence or a lease? The answer rather depends. Features to be clear about include the presence of regular periodic payments and a specific end-date to the agreement. There are benefits and obligations to both. Being clear on what these are beforehand is important. Sign the wrong agreement and you may find your rights are not protected or your business is affected.
One of the key elements of a lease (as opposed to licence) is exclusive possession. A person has exclusive possession if it can exercise the rights of the landowner and exclude both the landlord and third parties from the land (except to the extent that the landlord has reserved rights of entry, for example to carry out works).
Possession is not the same as occupation: a tenant may have possession by virtue of being able to receive the rents and profits of the land (reflecting the right of ownership) but the person in occupation could be the undertenant to whom the tenant has granted an underlease.
Just because you might call the agreement to occupy a “licence” does not mean that it is a licence. A lease may still come into existence, notwithstanding the express terms of the contract, if exclusive possession is granted. The consequences of a business lease coming into existence when it is not intended are that the tenant may acquire security of tenure and it will be difficult to get him/her out.
Dunn & Baker Solicitors advise business Landlords and Tenants on setting up the right agreement for them. Drafting a lease or a licence, explaining the terms, obligations and liabilities is done free from legal jargon. Our legal experts work with you, deal with any problems and make sure costs, timescales and likely outcomes are clear. If your licence or lease needs to be amended, or it is time for renewal, we can help you do this as well.