Will License Instead of Lease Adequately Protect Your Interests?

Some tenants make the fatal mistake of assuming that a license gives them the same rights as a lease. But that’s a mistake. Consider the following when making a decision about which agreement will work best for you.

Understand Distinctions

If you’re considering using a license agreement instead of a lease for space, make sure you understand that the rights you have under each type of contract differ to some degree. One of the significant differences is the owner’s ability to revoke a license and evict you, without your being able to call on the protections you would have if you had signed a lease for the space.

Case on Point

A New York case highlights the fact that a license has fewer protections. There, a license agreement entitled an owner to evict a retail tenant in its mall after a dispute. The licensee claimed that it had the same rights that it would’ve been entitled to under a lease, including the right to stay in the space until the matter was settled. But a court granted the owner’s request for an eviction judgment.

The court reasoned that the owner was entitled to possession of the space because it demonstrated that the agreement that it signed with the licensee constituted a license and not a lease. It said that the central distinguishing characteristic of a lease is the surrender of absolute possession and control of property to another party for an agreed-upon rental, whereas a license gives no interest in land and confers only the nonexclusive, revocable right to use a space [Chong Wang v. Crossgates Mall Gen. Co. Newco, LLC, October 2012].