Written by
Katherine Oakes
Partner
A commercial lease and a licence are two different legal arrangements governing the use of a property. Here are the key distinctions:
Nature of Interest:
Commercial Lease: In a commercial lease, the tenant generally obtains an exclusive legal interest in the property for a specified period. This interest is often transferable and can confer the right to sublet the premises.
Licence: A licence, on the other hand, grants permission to use the property but doesn’t create an interest in the land. It is typically a personal right to occupy the space and is often revocable.
Exclusive Possession:
Commercial Lease: Tenants under a lease typically enjoy exclusive possession of the premises, meaning others, including the landlord, cannot enter the space without permission.
Licence: Licensees do not usually have exclusive possession, and the licensor may retain the right to enter and use the property.
Transferability:
Commercial Lease: The tenant often has the ability to transfer or sublease the leased premises to another party, subject to the terms of the lease.
Licence: Licences are usually personal and cannot be freely transferred or sublet without the licensor’s consent.
Control and Use:
Commercial Lease: The tenant generally has more control over the premises and can use it as specified in the lease agreement, subject to compliance with applicable laws and lease terms.
Licence: The licensor retains more control over the use of the property, and the licensee’s activities may be more restricted.
Length of Agreement:
Commercial Lease: Leases typically have a fixed term, providing stability and security for the tenant’s business.
Licence: Licenses may be more flexible, with terms that can be shorter and less rigid.
Termination:
Commercial Lease: Termination of a lease usually involves a formal process and may be subject to specific conditions outlined in the lease agreement.
Licence: A license can often be terminated more easily, sometimes without the need for a formal process, depending on the terms of the agreement.
It’s crucial to carefully consider the specific needs and circumstances of the parties involved when choosing between a commercial lease and a licence, as each option has its own advantages and limitations. Consulting with legal professionals can provide tailored advice based on your specific situation.
This article is intended for guidance only and does not constitute legal advice – 2024
Partner
