Burgess Thomson Lawyers

Licence Agreements

Property & Conveyancing

Licence Agreements Newcastle

A licence agreement has similarities to a lease. Like a lease, licence agreements involve the landlord permitting a tenant to occupy their land and property. The length of occupancy and conditions of use are also determined in the licence agreement. Despite the similarities, there are two key differences between a lease and a licence agreement. These two differences relate to exclusive possession and proprietary interest. Based on these differences, a licence may be more appropriate than a lease and vice versa. Our team at Burgess Thomson are able to offer advice on the best course of action when considering a licence agreement. If you are in the process of entering a licence agreement or wanting to negotiate the terms of your current licence agreement, we are able to guide you throughout the process.

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Frequently Asked Questions

What is Exclusive Possession?

A licence agreement cannot grant exclusive use and occupation to the tenant, whereas a lease can. So, in the case that you share the premises with another party in a co-working space, a licence agreement may be more suitable for your business. Something to consider is whether the premises you operate will have clear boundaries. Where a business operates in an area with no boundaries, such as a hairdresser who rents a chair in a salon a licence agreement will be applicable.

How is proprietary Interest Relevant?

A licence allows the tenant to use the space provided by the landlord but does not confer the rights to the property as is the case with a lease. Because a lease grants an absolute interest in the land to the tenant it provides more security afforded by legislation. The advantage of a licence agreement is its flexibility, it can be terminated early by written notice. You are also able to vary the agreement such as adjusting the area of the operating space afforded to you. To do this in a lease arrangement a new lease would have to be entered with new terms. Licences are ideal for short term arrangements, such as those less than six months.

What should I consider when entering into a licence agreement for a commercial property?

When entering into a Licence Agreement, there are a number of considerations you must make, including:

· What does the licence fee include?

· What building facilities do you have the right to use?

· What services will you provide and what services will be provided to you?

· Who else will you be sharing the space with?

· Do you need to provide a Security Deposit?

· What is a “set-up” fee?

· What address will you use as your registered business address?

· How much notice is required to terminate the agreement?

· How long does the agreement specify you will be able to use the premises for?

· Are there any specific rules or policies for the building you will have to abide by?

What is a 'set up fee'?

The “set-up fee” is a one-time payment made at the beginning of the licence that covers your set-up and general administration costs. This may pay for security-passes or keys.
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