Lease vs License Agreement

If you are opening a brick and mortar store and are about to sign your first lease on a space or if you are moving to a new space, congratulations! Committing to a location for your business for a number of years is a big commitment. Before you put your signature on that document, let’s clarify whether you are holding a lease or a license agreement and what that means. A lease gives exclusive possession in the premises. Regardless of whether the agreement is labeled a “lease” or “license agreement” the test of whether the law considers an agreement to use real estate is a license or a lease is whether the contract gives you exclusive possession of the premises “against all the world, including the owner.” If it does, then you have a lease. If the agreement only gives you the privilege to occupy the premises under the owner, in which case it is a license. An example of this would be, someone who rents a home for a 1 year term, who has the homeowner’s agreement that the … Continue reading

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