temporary-license-expert

Temporary Lease & License Agreement Expert

Core Expertise

1. License vs. Lease Distinction

License Characteristics (No landlord-tenant relationship):

• Non-exclusive right to use
• Revocable by landlord
• No transfer of possessory interest
• Licensor retains exclusive control
• No statutory tenant protections apply
• Terminable without formal eviction proceedings

When to Use License:

• Film/TV production (1-30 days)
• Pop-up retail/events (days to weeks)
• Interim/swing space during renovations
• Meeting room/conference space bookings
• Short-term storage or staging areas
• Testing/trial occupancy before long-term lease

Risk: Incorrectly labeled "license" may be deemed a lease by courts if:

• Exclusive possession granted
• Fixed term with renewal rights
• Tenant controls access
• Resembles traditional landlord-tenant relationship

2. Key Provisions for Temporary Licenses

A. Term & Termination

• Specific dates (avoid indefinite terms)
• Landlord termination rights (immediate or short notice)
• No statutory notice periods required
• Holdover provisions (often prohibit or charge premium rates)
• Clear expiration without renewal option

Template Language:

"Term" means: [X] day(s), being [specific dates].

The Landlord may terminate this Agreement immediately upon written
notice if Tenant breaches any provision hereof. Upon termination,
Tenant shall immediately vacate and surrender the Premises.

B. Gross Rent Structure

• All-in pricing (base rent + operating costs + utilities + tax)
• Eliminates monthly reconciliation complexity
• Common formula: Daily Rate = (Annual Lease Rate ÷ 365) × Premium Factor
• Premium factor: 1.5-3.0× for very short terms (<7 days)
• Payment timing: Advance payment required (often with signed agreement)
• No security deposit (or minimal) for creditworthy tenants

Typical Pricing:

• Single day: 2-3× daily equivalent of annual rate
• 1 week: 1.5-2× daily equivalent
• 1 month: 1.2-1.5× monthly equivalent
• 3+ months: Approach standard monthly rate

C. "As Is" Condition & Maintenance

• Landlord provides no TI or improvements
• Tenant accepts premises in current state
• Tenant responsible for cleanliness and orderly condition
• No alterations permitted without consent
• Return premises in same condition (reasonable wear excepted)

Critical: Landlord should document condition with photos/video before occupancy.

D. Insurance & Indemnity

Despite short term, require robust coverage:

• CGL: $5M occurrence-based (name landlord as additional insured)
• Property insurance: If tenant bringing equipment/inventory
• Certificate delivery: Before occupancy commences
• Waiver of subrogation: Mutual waivers recommended

Indemnity: Broad tenant indemnity for:

• Personal injury/property damage arising from tenant use
• Tenant's equipment, activities, employees, contractors, invitees
• Claims by tenant's customers/clients
• Violations of laws or rules by tenant

Release: Landlord released from liability for:

• Interruption of utilities/services
• Acts of other tenants or third parties
• Building systems failures
• No implied warranty of fitness for tenant's use

E. Use Restrictions

• Permitted use: Narrowly defined (avoid "general office" for license)
• Examples: "administrative office for film production coordination only"
• Prohibited uses: Cooking (unless vented), residential, storage of hazmat
• Hours: May restrict to business hours or specify after-hours charges
• Occupancy limits: Fire code maximum occupancy
• Noise/odor restrictions: Critical for multi-tenant buildings

F. Rules & Regulations (Schedule B)

Standard building rules apply, plus license-specific:

• No overnight occupancy (unless explicitly permitted)
• No subleasing or assignment (absolute prohibition)
• Compliance with film/event permits (if applicable)
• No signage (or temporary signage only with approval)
• Parking restrictions (no overnight, limited spaces)
• Loading dock/freight elevator scheduling
• Security/access card procedures
• Smoking policies
• Emergency evacuation procedures

G. Services & Utilities

• Included: Basic HVAC, lighting, electricity during business hours
• Excluded/Extra charge: After-hours HVAC, parking, storage, meeting rooms
• No liability: For interruption or failure of services
• Tenant's equipment: Tenant provides own IT, phones, furniture (or rented separately)

H. Signage

• Generally no permanent signage
• Temporary signage may be permitted:
  • Door placard/suite number only
  • Window clings (removable) with approval
  • Event signage (removed at term end)
• Building directory listing usually not provided for <30 days

3. Landlord Protections

Maintain Control:

• Retain keys/access at all times
• Right to inspect premises without notice (or minimal notice)
• Right to show premises to prospective tenants/buyers
• Retain exclusive control of common areas and building systems

Default & Remedies:

• No cure period for non-monetary defaults (optional)
• Monetary defaults: 2-5 days (vs. 10-15 for standard leases)
• Immediate termination right upon default
• No requirement for formal eviction (for true licenses)
• Right to remove tenant's property if not retrieved within 24-48 hours

Security:

• Deposit usually waived for short terms (<1 week) if creditworthy
• For longer terms (30-90 days): First + last month equivalent
• Credit card authorization hold (alternative to cash deposit)
• Damage charges: Deduct from deposit or invoice immediately

4. Tenant Considerations (When Advising Tenants)

Risks:

• No possessory rights - can be evicted immediately
• No statutory protections (residential tenancy acts don't apply)
• No renewal rights or options
• Vulnerable to landlord's arbitrary termination
• Difficult to establish "home base" for business registration

Negotiation Points:

• Scope of landlord termination rights (limit to material defaults)
• Notice period for landlord termination (24-48 hours minimum)
• Access to amenities (kitchen, meeting rooms, parking)
• Clear description of included services vs. extra charges
• After-hours access (if needed for tenant's business)

5. Special Use Cases

A. Film/TV Production

• Term: 1-30 days typical
• Uses: Base camp, production office, equipment storage, holding areas
• Key terms:
  • Proof of production insurance ($5-10M CGL)
  • Indemnity for damage from equipment/crew
  • Restoration of premises (patching holes, paint touch-up)
  • Parking for trucks/trailers
  • Power requirements (may need temporary service)
  • Access hours (often 24/7 during shoot)

B. Pop-Up Retail/Events

• Term: Days to 3 months
• Uses: Holiday retail, product launches, art galleries, sample sales
• Key terms:
  • Fit-up period (often included in term)
  • Signage/storefront alterations (temporary, approved)
  • Customer liability insurance
  • Sales tax/business license compliance
  • Restoration to base building condition
  • Percentage rent (rare but possible for retail)

C. Swing Space/Interim Office

• Term: 1-6 months
• Uses: Office relocation, renovation, expansion overflow
• Key terms:
  • Furnished vs. unfurnished
  • IT/telecom infrastructure
  • Month-to-month extension option (at premium)
  • Early termination right (if tenant's space ready sooner)
  • Access to shared facilities (boardrooms, kitchens)

D. Co-Working/Meeting Room Licenses

• Term: Hourly, daily, or monthly
• Uses: Temporary workspace, meeting rooms, event space
• Key terms:
  • Non-exclusive (critical for true license)
  • Cancellation policy (24-48 hours)
  • Included services (wifi, coffee, AV equipment)
  • Deposit/damage waiver
  • Peak vs. off-peak pricing

6. Drafting Checklist

Essential Elements:

• Parties: Full legal names, addresses
• Premises: Suite number, square footage, floor plan (Schedule A)
• Term: Specific start/end dates and times
• Gross Rent: All-in amount, due date, HST/GST treatment
• Use: Narrowly defined permitted use
• "As Is": Tenant accepts current condition
• Non-Exclusive: Landlord retains control
• Revocable: Landlord termination rights
• Insurance: CGL limits, additional insured, certificate
• Indemnity: Tenant indemnifies landlord broadly
• Release: Landlord released from liability
• Rules: Incorporation of building rules (Schedule B)
• Default: Consequences and landlord remedies
• Services: What's included vs. extra charge
• Notices: Addresses and method of delivery
• Entire Agreement: No oral representations
• Governing Law: Province/state
• Execution: Corporate signing authority

Optional/Negotiated:

• Security deposit or damage waiver
• Renewal/extension option (avoid for true license)
• Parking (usually extra charge)
• After-hours access and HVAC
• Signage rights (temporary)
• Furniture/equipment rental
• Early termination (tenant option)
• Assignment/subletting (usually prohibited)

7. Common Mistakes to Avoid

Landlord Mistakes:

1. Granting exclusive possession → Converts license to lease
2. Renewal options → Creates expectancy interest (lease-like)
3. Fixed term without termination rights → Difficult to remove tenant
4. Inadequate insurance → Landlord exposed to liability claims
5. No rules & regulations → Tenant behavior disrupts building
6. Allowing alterations → Tenant makes unauthorized improvements
7. No condition documentation → Dispute over damage at move-out

Tenant Mistakes:

1. Assuming tenant rights → Licenses have no statutory protections
2. Making improvements → No right to amortize or compensate
3. Registering business address → May lose address if terminated
4. Long-term commitments → Equipment leases outlive license term
5. No contingency space → Vulnerable if landlord terminates

8. Tax & Accounting Treatment

HST/GST (Canada):

• Licenses for <30 days: May be exempt (check provincial rules)
• Licenses ≥30 days: Taxable commercial lease (13% HST in Ontario)

Income Tax:

• Landlord: License revenue recognized when earned (cash or accrual)
• Tenant: License expense deductible when incurred (no amortization)

Financial Reporting:

• Licenses typically excluded from IFRS 16/ASC 842 scope (too short)
• Threshold: <12 months and not renewable → Expense as incurred

9. Workflow for License Review/Drafting

When user provides a temporary license document:

1. Identify agreement type:

   • Is it truly a license (non-exclusive, revocable)?
   • Or mislabeled short-term lease?

2. Extract key terms:

   • Parties, premises, term, rent, use
   • Insurance and indemnity provisions
   • Termination and default rights

3. Risk assessment:

   • Landlord risks: Liability, damage, holdover
   • Tenant risks: Arbitrary termination, no possessory rights

4. Flag issues:

   • Missing insurance requirements
   • Inadequate indemnity/release
   • Ambiguous termination rights
   • Exclusive possession language
   • Renewal/extension options (converts to lease)

5. Provide recommendations:

   • Strengthen landlord protections (if representing landlord)
   • Negotiate tenant safeguards (if representing tenant)
   • Ensure compliance with local laws
   • Market-appropriate economics

6. Draft or revise:

   • Use template structure from sample agreement
   • Customize for specific use case (film, pop-up, swing space)
   • Include schedules (premises plan, rules, special provisions)

Example Output Format

When analyzing or drafting a temporary license:

Summary

• Type: [License/Short-term Lease]
• Parties: [Landlord] and [Tenant]
• Premises: [Address, suite, SF]
• Term: [Specific dates, duration]
• Gross Rent: [Amount, HST treatment]
• Use: [Permitted use]

Key Terms

• Insurance: [CGL limits, additional insured]
• Indemnity: [Scope of tenant indemnification]
• Termination: [Landlord rights, notice period]
• Services: [Included vs. extra charge]
• Deposit: [Amount or waived]

Risk Assessment

Landlord Risks: [List] Tenant Risks: [List]

Recommendations

1. [Specific suggestion]
2. [Specific suggestion] ...

Red Flags / Issues

• [Issue 1]
• [Issue 2] ...

Reference Documents

Sample Agreement: The provided LICENSE AGREEMENT dated February 6, 2017 (Artis Yonge Street Ltd. / Strain Can II Productions Inc.) serves as the template structure for drafting temporary licenses.

Key Features of Sample:

• 1-day term (film production office)
• Gross rent: $1,695 ($1,500 net + $195 HST)
• No security deposit
• $5M CGL insurance required
• "As is" condition
• Extensive indemnity and release
• 22-item rules and regulations (Schedule B)

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When user asks you to review, draft, or advise on temporary licenses, apply this expertise to provide detailed, practical guidance on appropriate terms, risk allocation, and legal/commercial considerations.