Whilst a lease and a licence may appear to be very similar, there are several key and critical differences from a legal perspective.
A lease allows for a proprietary interest in land and a tenant is accordingly entitled to exclusive use of the land. Alternatively, a licence is merely a personal right. That is, a contractual permission to allow someone to use another’s land for a particular purpose. A lease is grounded in property law and is, therefore, a far stronger right in land. A licence is based in contract law only and, accordingly, provides a somewhat weaker right.
With a leasehold interest, a tenant is entitled to take action against third parties in order to defend / protect its interest, however, a licence holder cannot.
A lease allows more security because a tenant is entitled to exclusive possession of the property for the term of the lease. A licence can be revoked by the grantor of that licence at any point.
Revocation of a licence may amount in a breach of contract, entitling the licence holder to sue. However, in these circumstances, the licence holder would still not be able to enter the land because their authority from the owner of the land is gone. Leasehold interests can also be bought to an end, however, the protections that this type of interest provides makes it far more difficult for a landlord to end a lease.
Are you a Tenant, Resident or Licensee?
Under property law legislation, your rights and duties change depending on whether you occupy premises as a tenant, resident or as a commercial tenant. If you are not a resident or a tenant then residential tenancy legislation will not apply at all.
It is important to note that under residential tenancy legislation there is a presumption that it applies. If someone disputes whether it applies, it is up to the person alleging that it doesn't apply to then prove this.
In general terms, a tenant is someone who lets property under a tenancy agreement. Tenants are allowed to have exclusive possession of the property in exchange for rent paid. This means that tenants are able to refuse entry to anyone, including the landlord. This generally only applies to residential premises and there are several exclusions such as hotels, farms and educational institutions.
Rooming House Residents
A person who lives in a rooming house residence as their primary residence is a “resident” for the purpose of residential tenancy legislation. A rooming house is any building in which there is one or more rooms available for rent, as long as no more than four people occupy a room.
Despite living in a rooming house, a resident may opt to sign a tenancy agreement, in which case the relevant tenancy sections of residential tenancy legislation apply instead.
Licensees are not given rights under residential tenancy legislation. It can be quite difficult to determine who is, in fact, a licensee because often they look very similar to tenants. It is, therefore, necessary to determine if exclusive possession exists. Factors which may indicate that exclusive possession exists are whether the licensor also lives in the building and / or whether the licensee can exclude others from the premises.
Director and Senior Associate Meghan Warren specialises in assisting medical and health professionals and practices including in the areas of business, commercial and intellectual property.