Most have heard of a commercial LEASE concerning New York City real estate. Some may be surprised that one may also obtain a LICENSE concerning real estate. In simple terms, a lease grants possession of the real estate, while a license grants no possession but the right to engage in specific actions (usually of a temporary nature).
More specifically, as discussed in the case of Union Square Park v. New York City Department of Parks and Recreation, 22 NY 3d 648 (NY Court of Appeals 2014), a document is a New York lease if “it grants not merely a revocable right to be exercised over the grantor’s land without possessing any interest therein but the exclusive right to use and occupy that land.” According to the case, it is the conveyance of “absolute control and possession of the property at an agreed rental which differentiates a lease from other arrangements dealing with property rights.” By contrast, a real estate license is a revocable privilege given “to one, without interest in the lands of another, to do one or more acts of a temporary nature upon such lands.”
Generally, a lease and a license are written documents that may look similar. However, it is not the document’s title or the agreement term that controls whether it is a lease or a license. Licenses tend to be a very brief duration, but leases can also be for very short terms. The rights and obligations outlined in the agreements distinguish the lease and License.
Examples of a license include:
- A food or concession vendor agreement at a sports arena
- An agreement allowing a wedding ceremony or banquet at a given location
- A concert or other performance
- An agreement allowing the placement of vending or other machines
- Selling a ticket lets visitors view the property, contents, or performance.
From the vantage of a landowner, there are several advantages of granting a license instead of a lease. First, as noted, a license does not grant any right of possession. The landowner can revoke a license “at will” quickly. Third, because there is no right to possession, a license allows the landowner to use self-help remedies to remove a licensee (without the need for complex and expensive litigation).
In New York, to be a valid license, generally, two things must be in the License. If one or the other is missing, then there is a high probability that a New York court would deem the arrangement a lease. Remember, the title of the document does not control. The two general requirements are:
- The document contains a clause allowing the landowner to revoke the License at will.
- The document gives the landlord absolute control over the land/property.
The Union Square Park case cited above is a good example. The NYC Parks department granted a license for a restaurant in Union Square Park. The 15-year agreement could be terminated with 30 days’ notice. Further, nothing in the document gave the restaurant any right to possession or free use of the property. The Parks Department determined when the restaurant would be open and closed and imposed many other requirements and restrictions. The court held that the agreement was properly deemed a license.
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Call the experienced New York commercial lease and real estate attorneys at Wright Law Firm NYC for more information. We provide top-tier commercial real estate legal and legal services for the NYC business community. To schedule a consultation, contact our office by e-mail or call us at (212) 619-1500.