Are you thinking about leasing or letting a property in Ireland?
Or maybe you are being offered a licence? And you’re not sure what the difference is?
Hopefully this guide will answer most of your questions.
Tenancies or leases fall into two broad categories:
- A tenancy for a fixed term
- A tenancy from year to year or other period of time.
Fixed Term Tenancies
A tenancy can be created for any fixed term of any duration. Once the fixed term is arrived at the interest of the tenant in the property ends and the lessor is entitled to possession.
A periodic tenancy runs for a period of time which can be a week, month, year, etc. It automatically renews on the expiry of the initial period and will continue indefinitely until the lessor serves a notice to quit.
The notice periods are set by statute and common law. These tenancies can be created expressly or by implication.
Tenancy at Will
A tenancy at will is a common law concept and involves the person being in possession of the property for an indefinite period with the consent of the owner. This type of tenancy can be terminated by either party at any time.
It is worth noting that the relationship of landlord and tenant does exist but the tenant has no interest in the land which he can transfer to third parties. His tenure is ‘personal’ between himself and the landlord.
This type of tenancy is not covered by landlord and tenancy legislation and is deemed to end one year after it commences unless determined beforehand.
Tenancy at Sufferance
This type of tenancy arises by operation of law and occurs when a tenant is in possession at the end of the lease without the landlord’s consent and without paying rent. However this tenant is not a trespasser as his original entry into possession was lawful.
A tenant at sufferance has no interest in the land and is not in a landlord/tenant relationship; in fact, he is only called a ‘tenant’ because his original entry into possession was lawful.
A statutory tenancy arises under various pieces of legislation such as the Housing (Private Rented Dwellings) Act, 1982 and the Landlord and Tenant (Amendment) Act, 1980.
Part 4 of the Residential Tenancies Act, 2004 also provides relief to tenants who have been in occupation of a dwelling under a tenancy for a continuous period of 6 months.
Temporary Convenience Lettings
These lettings can arise in residential or commercial situations. If they are genuinely for the temporary convenience of the owner of the property they fall outside the statutory protections afforded to tenants under landlord and tenant legislation.
In such commercial lettings, it is essential that it is stated in the letting agreement that the nature of the temporary convenience is set out. There is no legal definition of ‘temporary convenience’ but it must be for the bona fide temporary necessity of the landlord.
Otherwise statutory protection and controls will be available to the tenant.
There is no limit on the duration of such lettings.
There is a wide range of tenancies which can exist for both commercial and residential properties.
The Land And Conveyancing Law Reform Act 2009 provides that the relationship of landlord and tenant does not now arise in relation to a tenancy at will or tenancy at sufferance.
Property licences can often be confused with leases.
There are significant differences between a licence and a lease when it comes to the letting or use of property.
- A licence, unlike a lease, does not transfer any interest or estate in the land to the licensee
- A licence is a ‘mere permission’ to use the premises
- A lease confers statutory rights and protections whereas a licence confers none of these.
Should a dispute arise as to whether a user of a premises has a licence or a lease, a Court will look at what the parties intended, not what they say afterwards.
So, if an agreement has all the requirements of a tenancy/lease, the parties cannot insist afterwards that they only created a license.
Courts will, in the event of a dispute, look at the relationship between the parties objectively and if the agreement satisfied all the characteristics of a tenancy, decide that the agreement is a lease.
Types of Licence
There are a number of different types of licence including:
- A bare licence which is a mere personal permission. As it is personal to the licensee there is no interest that (s)he can transfer to a third party.
- A licence coupled with an interest. This type of licence can be transferred to third parties. This might arise where a person is given permission to enter another’s land to cut down and remove trees or shoot game.
- A contractual licence-this licence is created by a contract and the power to revoke the licence will be contained in the terms of the contract. There is no proprietary interest in the land though. A licensor can be prevented from revoking the licence which is not in accordance with the contract underpinning the licence.
- An estoppel licence. This will arise where a person who holds a licence relating to land sells an interest in that land to a third party who acts in good faith. The licensor in this situation may be prevented from revoking the licence as against the new purchaser and an estoppel licence may arise where the licensor is ‘estopped’ from revoking the licence.
Characteristics of a Licence
The main characteristics of a licence and distinguishing features from a lease include:
- There is no interest in land
- It may be revocable
- The licensee does not enjoy exclusive possession of the land
- The licensee occupies the land with the consent of the licensor
- The rights in the license are personal to the licensee
- The licensee agrees with the licensor to co-operate in relation to the control and management of the property.
Property owners or intending tenants need to be aware that entering legal relations which involve occupancy of a premises and on-going payments that they should be clear in advance as to what the relationship is.
They would also be well advised to speak to their solicitor.
By Terry Gorry