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Commercial Property Licences

EM Law are experts in drafting, negotiating and advising clients on commercial property licences. Our lead commercial property lawyer is Razina Akhtar who has extensive experience in advising clients on a wide range of commercial property matters.

What are commercial property licences?

In essence, a licence is simply permission for a licensee to do something on a licensor’s property. The permission given to the licensee prevents the permitted act from being a trespass.

A licence is by definition not a lease: it is a personal right or permission that offers no security.

A licence entitling the licensee to use the land for the purpose authorised by the licence does not create an estate in land. A licensee’s occupation is precarious. If the landowner sells the land (even to a group company), the licence will end, although the licensee may have a right of action against the original licensor for breach of contract.

The distinguishing feature of a lease, as opposed to a licence, is that with a lease, the tenant has exclusive possession of the let property.

Commercial Property Licences: examples of situations where a licence to occupy can be used

Some examples of where a licence to occupy may be encountered include:

  • As a “concession” arrangement in a department store.
  • Where serviced office space is made available for a short period of time.
  • Between a seller and buyer during the period between exchange and completion of a sale contract.
  • Between a prospective landlord and tenant between exchange of an agreement of lease and the grant of a lease.

Commercial Property Licences: advantages 

  • Generally, a licence is a shorter document than a lease and can be prepared and completed more quickly and therefore more cheaply.
  • There is a little more security where an occupier occupies premises as a licensee, rather than as a tenant at will, as the tenancy at will can be determined instantly.
  • A contractual licensee is entitled to the occupation that the contract provides and where the contact is determinable on notice, the licensee is entitled to the notice that contract provides.
  • There is no SDLT payable.

Commercial Property Licences: disadvantages

  • Despite the document being labelled a licence, if exclusive possession is in fact granted, there is always the risk for a landowner that the arrangement may later be challenged by the occupier. If this arrangement has lasted for more than six months or is on a periodic basis, a landowner could be exposed to a claim that the licence is really a lease, which is protected by security of tenure provisions.
  • An occupier generally does not have the same degree of control over the land as it would have if it were granted a lease.
  • A licensee’s occupation is precarious. If the landowner sells the land (even to a group company), the licence will end, although the licensee may have a right of action against the original licensor for breach of contract. A licence offers no security.

For any questions you may have concerning commercial property licences contact Razina Akhtar.

Commercial Property Licence Razina Akhtar EM Law

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