A — August 30 - September 12, 2013 — Mid Atlantic Real Estate Journal
www.marejournal.com
C ommercial R eal E state L aw
f you own real estate, there may be an occasion when a neighbor, contrac- By Charles Katz-Leavy, Verrill Dana LLP Do you have a license for that? When you need more than a handshake I
In many or most cases, the handshake deal does not offer sufficient protection to the property owner. In such an instance, a temporary license agreement may be the best option for the land- owner. The following is an example of what could happenwithout a license agreement: Neighbor asks: “We will be renovating our building and surrounding property for the next two weeks. Would it be ok if our employees park in your lot during this time period?”
Owner of Parking Lot an- swers: “No problem. Your people are welcome to park on the western side of our lot.” Hand shake ensues and the deal is made. The following week, one of the neighbor’s employees slips and falls on a patch of ice when exiting her car. The employee sues the property owner for failing to properly maintain the driveway. Re- gardless of whether the prop- erty owner is found liable for that employee’s injuries, the original “handshake” agreement has just become
an unexpected lawsuit. To avoid such a nightmare, the parking lot owner should have required the neighbor to enter into a license agree- ment with certain landowner protections. What is a license agree- ment? In real estate, a license agreement allows the user (“licensee”) to use the prop- erty of the landowner (“li- censor”) subject to certain terms and conditions. In general, licenses tend to be for shorter periods of time and are revocable, meaning
the licensor can terminate the license upon notice to licensee. The idea is that the licensee is using the property with permission and subject to certain terms. The licensee may or may not compensate the licensor for its use de- pending on the deal reached by the parties. Additionally, license agreements typically are much shorter than a com- mercial lease and therefore significantly less expensive to produce. What are the benefits of a license agreement? Generally, license agree- ments can be terminated by the licensor on written notice to the licensee. Because li- cense agreements are usually revocable, they typically are not recorded and therefore do not impair record title. Another important con- sideration is that a license agreement typically includes terms to protect the land- owner. For example, a well drafted license agreement should contain insurance and indemnification clauses to protect the licensor from lia- bility. The license agreement should require the licensee to maintain liability insurance, and it should shift the risk of liability to the licensee by requiring the licensee to indemnify the licensor for any and all damages that occurred from its use of the real estate. In the parking lot example, the licensee should have been required to maintain compre- hensive liability insurance and to indemnify the park- ing lot owner from any and all claims made by any of its employees relating to their use of the lot. If this had been done, the licensor would have been more protected from the risk of the injured employee. If you have any questions about leases, license agree- ments, or other real estate issues, please contact Charlie Katz-Leavy of Verrill Dana LLP. Charles M. Katz-Leavy is an attorney at Verrill Dana LLP, which has of- fices in Maine, Massachu- setts, Connecticut and Washington, D.C. Charlie handles commercial and residential real estate transactions. n
tor, or some- o n e e l s e seeks a favor. For example, s o m e o n e may want to temporarily use or pass t h r o u g h your proper-
Charles Katz-Leavy
ty. When someone seeks to use your real estate for only a short period of time, you may think a simple handshake agreement is good enough.
We have the experience to guide you all the way from the property line to the dotted line.
No matter how big or small your real estate project is, we have the right size team to efficiently see you through.
Contact: Attorney Charles M. Katz-Leavy (207) 253-4920
Portland, ME • Boston, MA • Augusta, ME • Stamford, CT • Washington, DC www.verrilldana.com
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