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Using a License Agreement Instead of a Lease

By Adam Leitman Bailey and John Desiderio
January 31, 2008

A number of years ago, I sat down with one of the New York's real estate legends and his company's general counsel. He was bothered by New York's eviction process ' the loss of rental income, the wasted legal fees, and the incredible amount of time between a tenant's default and an actual eviction.

For a number of his buildings, he was unveiling a new type of office space for smaller tenants needing smaller spaces. Under his design, a tenant would have a designated office and share a copy machine, fax machine, kitchen, and conference rooms. The furniture, carpeting, phones, computer, and coffee would be supplied by the landlord. The spaces would be pre-constructed. The renter would only need to bring a pencil to be able to work. The general counsel asked about using a license agreement where it could change the locks or, in this case, turn off the key cards upon a renter's default. Our firm's mission was to draft an enforceable license agreement providing for self-help without having to resort to litigation. This article discusses the license agreement ' its limitations and its powers. It also dissects and explains when and how to use a license agreement, and the ability to effectuate self-help properly.

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