The Difference Between a License and a Lease in Brooklyn Real Estate Law

When the owner of real property allows a third party to use all or part of their premises, they can enter into either a lease or a license with that third party. In general, a lease grants the tenant (or lessee) the exclusive right to use the property in question for a specified term in exchange for rental payments. A license, in contrast, is where the owner grants the third party a more limited right to conduct temporary activities on the property. Licenses are often non-exclusive and may be revoked at any time by the owner, unless the parties agree otherwise.

Billboard Operator Fights Back Against Car Wash Eviction

In most cases, both parties to a real estate transaction are clear as to whether they are entering into a lease or a licensing agreement. But there are cases where a disagreement arises after the fact. Indeed, a judge here in Brooklyn recently addressed such a case.

This lawsuit, Red Rock Outdoor Advertising, Inc. v. No Sleep Till, LLC, involved the display of outdoor advertising signs on the roof of an Atlantic Avenue car wash. The plaintiff alleged that in 2015 they signed a 10-year commercial lease with a car wash to construct and operate the rooftop billboards. The plaintiff further had an option to extend the end of the lease from 2025 to 2031.

A dispute later arose between the parties over the size of the billboards. This led the car wash to terminate the agreement and demand the plaintiff remove its signs. The plaintiff responded by asking Kings County Supreme Court to issue an injunction against the car wash. In response to this litigation, the car wash argued its agreement with the plaintiff was a license and not a lease.

The judge disagreed, however, and said that the agreement was quite clearly a lease. He noted that the agreement contained a number of provisions “consistent with those commonly founded in commercial leases.” For example, the agreement had a fixed term that was not revocable at will; the plaintiff had to make monthly rental payments; and the plaintiff was required to maintain insurance. Most tellingly, the agreement granted the plaintiff an “exclusive right” to use the property for advertising signs.

So what would have happened if the judge determined that the agreement was a license? In broad terms, a licensee does not have any interest in the property itself. This means that the owner, or a tenant who has exclusive possession like in this case, can simply remove the licensee by issuing a “Notice to Quit,” which is what the car attempted to do here. A lessor can only terminate a lease prematurely by initiating eviction proceedings.

Contact a New York City Commercial Leases Lawyer

Doing business in New York often means dealing with commercial leases. These are complex documents that affect every aspect of a landlord and tenant’s legal relationship. That is why it is important for all parties involved to work with an experienced New York City commercial leases lawyer. Contact Yeung & Associates, PLLC, at 718-889-7568 today to schedule a consultation.

Source:

scholar.google.com/scholar_case?case=5756879846925493401