With the boom in entrepreneurship in response to the COVID-19 pandemic, many entrepreneurs are attempting to navigate unfamiliar waters with regards to finding a location suited to their business needs. Since not all businesses are one-size-fits-all, many are discovering the perks of using shared office spaces through companies like WeWork and Workbar. However, many are being presented with a license agreement, rather than a lease, and aren’t sure of the difference and implications of such.
A lease is a property interest or estate in real property that grants a tenant the right to exclusive possession of the property for their own use and enjoyment for a period of time in exchange for payment of rent. Most people are familiar with traditional leases, whether residential or commercial.
By contract, a license is a temporary right to use property for a specific purpose. A prime example of a license agreement is when you buy a ticket to a sporting event or concert – you are granted permission from the venue to occupy the seat or space for the purpose of attending the event. The permission ends when the license is revoked or the particular purpose is over or has been completed.
Whether one option is better than another depends on the particular business. The advantages and disadvantages as well as how to distinguish one from the other is further explored in Part Two of this series.