When taking on a commercial property, you will need to decide on what basis the property is to be occupied. Do you want a lease agreement, licence agreement or tenancy at will?

Lease agreement

A lease is the granting of a right to exclusive possession of the property for a set period of time.

You will note that a lease gives a right to exclusive possession. This is a key element of a lease agreement.

Exclusive possession is where the tenant can exercise rights as if the landowner and can exclude the landlord from the property. However, the landlord will have rights reserved in the lease that allow him to enter the property.

Signing a lease agreement

Signing a lease agreement

Licence agreement

The granting of a licence allows a tenant (licensee) to do something on the landlord’s (licensor’s) property.

The difference between a lease agreement and a licence agreement is that a tenant under a lease, has exclusive possession of the property. However, where a tenant is a licensee, the tenant is only granted permission to use the property under the terms set out in the licence.

If the licence agreement states that it is for a fixed term, it reserves a rent and grants exclusive occupation of the property, then it is likely it will actually be a lease not a licence therefore, affording the tenant more rights.

Tenancy at will

A tenancy at will is where there is a tenancy on terms that allow either party to terminate the tenancy at any time. A tenancy at will cannot be assigned, unlike a lease which can be assigned.

This type of arrangement can be used for a short term let, for example whilst the parties negotiate the terms of a lease. Upon entering into the lease, the tenancy at would automatically end.

For more information on the above please contact Mark Fagan on 0113 320 5000. Alternatively, you can e-mail him at maf@winstonsolicitors.co.uk.