What Is A License Agreement Real Estate

The courts have concluded that licences are leases in which one or more of these characteristics are either completely absent from the agreement or are not sufficiently transferred to the powers retained by the licensor. However, the less control granted to the licensee, the more likely it is that the agreement will be a licence, since a licence does not provide autonomy, but simply allows a party to „provide services within an entity located on premises or operated by another that exercises oversight over how services are provided“. However, it was concluded that the licensee`s continued control over the prices charged by the licensee, the hours of operation in the authorized space and even the choice of the licensee`s employees does not constitute a guarantee that the contract will be considered a license and not a lease, since such controls can no longer be considered „more“, as by a reasonably diligent landlord vis-à-vis a tenant for [any] business. ft would be necessary“. On the other hand, in the case of a bona foi license agreement, the tenant-licensee does not own a property on the premises and has no ownership rights. Common law principles apply, and the owner-licensor has the unlimited right to use peaceful self-help at any time to remove a licensee from the licensed premises for any reason or no reason. Therefore, careful drafting of the appropriate licensing agreements is necessary and, to this end, there must be close cooperation between lawyers and their clients who wish to introduce a licensing regime. It is crucial to communicate with the client about the risks and benefits of using a licensing regime. In addition, lawyers must pay close attention to the client`s objectives and determine how many upfront costs the client is willing to accept in order to provide the type of „full service“ agreement that meets a court`s „licensing test“.

Owners must also make judgments about the commercial feasibility of attracting licensees who are willing to accept licensing agreements with „after approval“ revocation clauses. The willingness of potential tenant-licensees to sign such agreements may depend on the type of space the owner makes available for licensed use. B for example, if the licensed space is a warehouse, a multi-user office suite or a simple storage space. To attract licensees who are concerned about making a significant investment in revocable space, owners may create new financial incentives or incorporate into the agreement a mechanism to compensate a non-defaulting licensee for the remaining undepreciated value of its investment if the licensor invokes the „as desired“ clause of the agreement. To benefit from a license agreement, the owner must ensure that his agreement with the potential user of the premises is indeed a license and not a lease. .