A lease or a licence is the most common way of documenting a third party's right to occupy property. Although both a lease and a licence grant a third party the right to occupy property, issues can arise if the incorrect document is used.
What are the main differences between a lease and a licence?
A key element of a lease is that a lease grants the tenant exclusive possession. A person has exclusive possession if it can exercise the rights of the tenant but can also exclude both the landlord and third parties from the property (save for any rights the landlord may have reserved over the land).
A lease will be for a fixed term (unless any rights to terminate the lease early are agreed between the parties) and a rent is likely to be payable for the duration of the lease.
The benefits of granting a lease (rather than a licence) are:
A licence is simply permission for a licensee (the third party) to do something on the licensor's (the landowner) property for a short period of time. A licence does not grant exclusive possession of the property but is a personal right to do something on the licensors property.
The benefits of granting a licence (rather than a lease) are:
Issues can arise when a document which is labelled as a licence is put in place but the occupation of the third party is more akin to a lease based on the position 'on the ground'. The occupation could be deemed to be a lease and security of tenure could be inadvertently granted which would allow the Tenant the right to remain in the property after the lease comes to an end. If you are unsure whether to grant a lease or a licence, it is always best to obtain legal advice.