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Licence to Occupy

There are two ways you can occupy a property. One pertains strictly to commercial and the other is for residential. In a residential agreement to occupy you sign a tenancy agreement. However, the tenancy agreement is based on different laws, which means a tenancy is not going to be helpful in a commercial setting. For a commercial business where you need to rent property you need a licence to occupy.

A licence to occupy will explain what the tenant and landlord rights are as it pertains to a business. It is very explicit in its meanings. The licence to occupy definition states it gives a business the right to occupy another’s property for a specific time frame. Usually, this time period is short term and the property is not rented exclusively. Other occupants and the landlord can also occupy that space. In business the landlord will hold the rights of possession. However, the landlord can state that once a business signs the agreement they are responsible for partial possession.

The partial possession would be of the inside areas. The tenant would need to keep the inside area clean and in good repair. The structural and external part of the building is the responsibility of the landlord. The possession is not full because there may be more space available than just one, thus the other part of the building could be rented to another tenant.

In a licence to occupy you cannot renew the licence once the landlord asks you to leave. You must leave the premises on the end date of the contract. If the end date has yet to be reached there is a protocol the landlord would have to go through. The property owner would have to have just cause for why they wish to end the agreement early. Typically, this has something to do with defaulting on the rent or upkeep of the property. If the property owner is experiencing structural issues this could also be grounds to terminate the lease early.

The licence to occupy is good for up to a year. However, most licence to occupy agreements are more short term lasting for six months. At the end of six months the licensee and licensor can make a new licence to occupy. At this time the landlord may increase the rent or make other changes to the agreement.

This document will contain the date and the parties involved in the agreement. It also states the purpose of the contract between the two parties. The next section of the Licence to Occupy over views the licensee’s undertakings. The clauses will explain the obligations the licensee must adhere to including the licence fee. In turn the licensor obligations will be clearly stated, so that no party shall be confused regarding the Licence to Occupy’s stipulations and agreement.

In the licence to occupy there is a section in which the licensor or property owner can state they have the right to sell the property and send out notice boards. If the property owner invokes this before the end of the agreement there are two things that can be done. The licensor can give a reasonable amount of time for the tenant to vacate and hope the tenant will agree. If they do not the property owner cannot evict the tenant. They can however, ask if the tenant wishes to purchase the property from the owner. This would require a pre-emption agreement. If the business wishes to buy the building the licence to occupy ends and the sale begins. If selling the property is a matter of repossession on behalf of the bank the licensee can be asked to leave, and will be if the bank does foreclose.