Short term tenants of commercial premises may sometimes be allowed occupation under the terms of a licence, or even a tenancy at will.  This is an informal way of granting occupation of whole or part of a commercial property, usually for a short period of time, without entering into a commercial lease.

The principal advantage of either a licence or a tenancy at will are that they are reasonably quick and inexpensive to compile, and yet still comply with various obligations on the part of the licensor (landlord) and licensee (tenant) such as payment of rent and use of parking spaces.

But beware … where a licensee is in occupation of commercial premises for a period of 6 months or more and paying a licence fee, it can be determined by a Court that despite having occupation of the property under either a licence or a tenancy at will, the relationship has lasted for a sufficient period of time (usually more than 6 months) so as to establish that the occupier has security of tenure.

Security of tenure is a legislative entitlement to which a tenant of commercial property under the terms of a lease may become entitled.  Where the terms of a licence are expressed to stretch beyond a 6 month period and if the tenant can establish it has exclusive possession of all or part of a building, then it may have unwittingly have acquired a lease and security of tenure with it.

Where a tenant has acquired the protection of legislation and gained security of tenure, it means the landlord cannot demand vacant possession of the property or fail to renew the terms of occupation of the tenant, without application to the Court and on proving one of several grounds to the Court (usually that it either wants to occupy the property itself or redevelop it, and in either case compensation is payable to the tenant).

There are many factors a Court will look at and determining whether a licence is in fact a licence or a lease, but the longer the tenant is in occupation and the more exclusive possession the tenant has, the more likely it is to determine that a lease has in fact been created.