Lease or licence? The label might matter.

When deciding whether or not an agreement creates a lease or licence the Court considers whether or not they intended that the occupier should have exclusive possession. Where the parties have equal bargaining power and the benefit of legal advice then a declaration that they intend to create a licence rather than a tenancy is a pointer towards their true intention

In National Car Parks Ltd v The Trinity Development Co (Banbury) Ltd ([2001] EWCA Civ 1686, CA (Eng)) National Car Parks had entered into an agreement to manage a car park. This agreement described itself as a licence and contained a declaration that there was no intention to create a tenancy. The licensor’s successor in title sought to terminate the licence and the licensee claimed that it had a lease and the benefit of the security of tenure conferred by Part II of the Landlord and Tenant Act 1954. The English Court of Appeal considered the agreement and held that the parties had not intended that the licensee should have exclusive possession. Although the declaration of the parties’ intention to create a licence could not be determinative neither was it appropriate to ignore it when the parties were of equal bargaining power and had the benefit of legal advice.

One Response to “Lease or licence? The label might matter.”

  1. Street v Mountford | Land Law Says:

    […] v Villiers [1990] 1 A.C. 417). There is a slightly troubling statement in National Car Parks Ltd v Trinity Development Co (Banbury) Ltd ([2001] EWCA Civ. 1686) to the effect that, when making the lease / licence distinction, some weight […]

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