- Posted by camryn_admin
- On December 12, 2020
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The legal relationship between the landowner and a tenant resulting from a tenancy agreement is totally different from the legal relationship established by a license between the landowner and a licensee. You may look like the same thing, and you may have heard the terms that are used in a synonymous way. However, a lease and a licence are two separate legal terms that offer different rights and obligations. In the absence of a document out of the parties` intentions, it may be difficult to determine whether the agreement is a lease agreement or a licence in the event of a deterioration of the relationship. In Illinois, the Illinois Supreme Court considered at length the difference between a lease and a license in millennium Park Joint Venture, LLC v. Houlihan, 241/2d 281 (2010). First, the court noted that “the main difference between a lease agreement and a licence is that a lease agreement confers the right to own and control the property exclusively, whereas a licence simply gives the right to use the property for specific purposes, subject to the control of the licensee.” It is the degree of possession and control that determines whether a contract is a lease or a license. In addition, the court identified the following elements of a lease agreement: (1) the extent and limits of the property; (2) the duration of the lease; (3) the amount of rent; and (4) Time and method of reimbursement. The court found that if one of these elements was missing, a lease agreement was not established. Moreover, “the fact that an agreement may contain all these essential requirements for a lease does not necessarily constitute a lease agreement.” A rental agreement arouses interest in the property. For the duration of the lease, you have certain property rights on the property, as agreed in the contract.
You have the right to keep everyone, including the owner, away from the property. Potential licensees will likely refrain from entering into a revocable agreement at the will of the licensee and would likely not be invested in the construction of space without certain financial incentives from the licensee. This is why licensing agreements are primarily used for short-term users of office space, storage space and small retail space, such as mall kiosks. It is therefore necessary to draft appropriate licensing agreements carefully and, to that end, there must be close cooperation between lawyers and their clients who wish to set up a licensing system. Communication with the customer about the risks and benefits of using a licensing system will be essential. In addition, lawyers must consider the client`s objectives and determine the initial cost that the client is willing to accept to offer the type of “full service” agreement that will pass the “licensing test” of a court. Does the document confer on the non-owner rights to the premises, such as. B, the right to make repairs or to be responsible for safety? Does the owner have to cancel before the contract is terminated? Does the document include a “healing period” in the event of a failure on the part of the non-due party? Is there a holdover rule in the document? If the answer to these questions is “yes,” it is unlikely that the agreement between the parties is a real license, even if the document is as such and is likely to be a lease. Most important The right to license ownership is the right to revoke the licence “as it sees fit” and to use “self-help” to remove a defaulting licensee from the licensed premises, without months or years of long and frustrating litigation to recover possession of valuable real estate. Whether the parties refer to an agreement as “license” or “lease,” the utility indices include the extent to which each party provides essential services (maintenance, repair, services, cleaning, security, etc.) and the owner`s right to modify the premises. The less the landlord provides services, the easier it is to argue that the relationship is that of the landlord/tenant and not the licensor/licensee.