Lease VS Licence to Occupy

A Lease or a Licence A lease and a licence agreement are similar in that they are both contractual agreement and that they both allow a person to use and occupy a property. However, there are some key differences between them. This article will help you better understand the key differences in a lease and a licence agreement. Exclusive Possession According to Radaich v Smith (1959) 101 CLR 209, a fundamental difference between a lease and a licence agreement is that a lease would grant the right to exclusive possession of a property to the lessee, while a licence agreement would not grant a right to exclusive possession. Broadly speaking, a right to exclusive possession enables the lessee to exclude strangers and the even the landlord from entering the premises and to maintain an action of trespass. However it should be noted that a right to exclusive possession can only be granted if the occupier is the sole occupier of a property. Proprietary Interest A lease grants an interest in the land or property which is transferable to the lessee for the period of the lease, while a licence agreement merely grants the licensee a non-transferable permission to do an act on the licensor’s land or property. This means that a lessee would have an action of trespass against anyone who entered into the property or land without the lessee’s permission. King v David Allen and Sons Billposting Ltd (1916) 2 AC 54 suggests that only proprietary rights are enforceable against third parties and a licence does not qualify as a proprietary right. Therefore, a licensee would not have an action of trespass. However, a licensee may nonetheless claim damages if the licensee’s right has been breached by the licensor. A Lease or a Licence Whether a lease or a licence agreement is more suitable depends on the circumstances. In summary, a lease offers a tenant more rights and protection, especially if the landlord decides to sell the property during the lease period; a licence agreement is more informal which means that fewer obligations are placed on each party, but the licensee also enjoys far less protection since the lack of proprietary interest. If you need help with any matters relating to leasing or licensing, please contact us at info@straitslawyers.com and find out how we can help.