How To Terminate A Licence To Occupy

A licence is a personal right or permission for a party to use, or ‘occupy’, a property. More specifically, a licence to ‘occupy’ is essentially permission for one party to do something on another party’s property. It is, by its very definition, not a lease. The owner of the property is usually referred to as the ‘licensor’, and the party granted permission to use the property, referred to as the ‘licensee’. In this article, how to terminate a licence to occupy, we take a look at the process and mechanism involved.

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What are the key features of a licence to occupy?

• They are agreements that do not benefit from security of tenure (meaning there is no statutory right for the licensor to remain in the property once the licence has come to an end);
• The rent is not controlled by statute;
• Rights of occupation are personal and cannot be passed on to any other party
• They are generally short-term arrangements
• They do not give the licensor exclusive use of the area in question.

What is the difference between a lease and a licence to occupy?

There is a great deal of case law that has established that even if a document is referred to as a licence, if it has the characteristics of a lease, then it will be deemed to be a lease. Because a document is labelled a licence, it doesn’t make it so.

The key factor in determining whether an arrangement is a lease or licence, is whether the party occupying a premises has a right of ‘exclusive use’. If the party occupying the premises can lock the owner of the premises out, it will generally be deemed to be a lease and not a licence.

How to terminate a licence to occupy?

There is no set formula to document the giving of notice to terminate or recording that the licence has ended. If the licence is well-drafted in the first place then this should set out the process required to be taken in order to terminate and these steps should be strictly followed. Under normal circumstances, a simple letter giving notice (and preferably acknowledged by the recipient) would be sufficient to terminate a licence to occupy. However, It is always sensible prior to terminating to obtain specific legal advice, as the terminating party (particularly if this is the property owner) will need to ensure compliance with any specific terms of the agreement and be comfortable that a tenancy arrangement has not been created.

Where a tenancy has indeed been created (perhaps because exclusive possession was indivertibly granted) if the landlord has not taken steps to exclude security of tenure provisions then the landlord will only be able to terminate if one of the limited statutory grounds arises.

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Our team is well versed in dealing with all the various aspects of terminating a licence to occupy in a commercial property and we are here to help in any way we can. We are able to explain clearly the legal issues and provide open, honest and professional advice.

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It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.

To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Commercial Property, News Tagged as