Lease vs. License: Short-Term Property Use, Access and Exclusive Control, Termination, Remedies

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Thursday, April 21, 2022

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This CLE webinar will examine the use of licenses versus leases for short-term occupancy use. The panel will discuss when a license should be considered, the contract terms that must be included in such agreements, and what termination provisions and remedies are available. The panel will address when a traditional lease should be used rather than a license even when occupancy is for a limited term.

Description

Landlord attorneys have either overlooked or been too cautious to suggest the use of license agreements to their clients. Currently, real estate license agreements are utilized primarily by owners of properties licensed to short-term users: office space, laundry facilities, certain types of storage spaces, and kiosks in shopping malls. More firms are now adopting a "hybrid" model where employees divide their time between working remotely and working in the office. This greater demand for part-time office space may result in an increased use of license agreements. Whether there is a market for real estate license agreements for other types of occupancy is not as apparent but given the landlords' need to be relieved of the frustrations of traditional landlord-tenant litigation, such an agreement may be useful for the right business plan.

A major benefit of the owner-licensor's rights in a license relationship is the right to revoke the license "at will" and to use "self-help" to remove a defaulting licensee from the licensed premises without having to endure months or years of lengthy and frustrating litigation to regain possession of valuable real estate.

In contrast to the hostility of courts to allow traditional landlord's use of self-help, under a bona fide license agreement, the tenant-licensee owns no estate in the premises and has no right to possession. Common law principles apply and the owner-licensor has the absolute right to use peaceable self-help at any time to remove a licensee from the licensed premises for any or no reason.

From the tenant's perspective, there are occasions when a lease would be preferred to the flexibility, but lack of security, of a license. Tenants seeking REIT qualified assets will negotiate for a lease. Though some tenants will enter into license agreements, the tenant will want to review termination rights in any written agreement to clarify how a licensor can exercise such rights.

Listen as our expert panel discusses the use of license agreements, the terms that must be part of such an agreement, and how termination and remedies are addressed. The panel will address best practices for advising clients on the best options when considering a license versus a traditional lease.

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Outline

  1. Real estate license vs. lease
    1. Use of real estate license
      1. Short-term use
      2. Alternatives
    2. License terms
      1. Termination
      2. At will
      3. Self-help
      4. Absolute control
      5. Permitted use
    3. Considerations for landlords
    4. Consideration for tenants
    5. Best practices

Benefits

The panel will address these and other relevant issues:

  • What types of businesses might consider a real estate license instead of a lease?
  • What should be included in the termination provisions of a real estate license?
  • What should tenants consider when picking between a license and a lease?
  • What remedies are available to license owners when a licensee breaches a real estate license?

Faculty

Abrams, Robin
Robin Abrams

Vice Chairman and Licensed Associate Real Estate Broker
Compass

Consistently named among the leaders in commercial real estate, Ms. Abrams offers unparalleled expertise and a...  |  Read More

Davis, Aimee
Aimee B. Davis

Founder
Aimee B. Davis Law

Ms. Davis is an experienced transactional attorney and corporate generalist with over 25 years of experience providing...  |  Read More

Wright, Glenn
Glenn D. Wright

Principal
Wright Law Firm

Mr. Wright has handled many billboard, retail, office and commercial leases in the New York metropolitan area for over...  |  Read More

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