What licence means
A licence is permission to do something on land that would otherwise be a trespass.
It gives the licensee no interest in the land. They are there with consent, and when the consent ends they must leave.
That is the fundamental difference from a tenancy. A tenant has exclusive possession for a term and holds an interest in the property. A licensee has permission and holds nothing.
The consequences follow from that. A licence is generally revocable in accordance with its terms. A licensee cannot exclude the owner. A licensee has no protection under tenancy legislation and no right to the recovery of premises process. And a licence does not bind a purchaser of the property in the way a lease can.
The critical point is that the label does not decide it. Courts look at what was actually granted. Where somebody has been given exclusive possession of a defined space for a term at a rent, they have a tenancy whatever the document is called.
How it is used
Licences are the right structure for arrangements that are genuinely not tenancies.
A desk in a co-working space, where the provider allocates space, retains access and services the premises.
A stall in a market or a kiosk in a mall, where the operator controls the space and the trader has a right to trade rather than a right to a defined area.
A concession within a larger premises, such as a counter within a shop.
A caretaker occupying with the owner's permission.
A contractor occupying a site to carry out works.
And a short-let, where the operator retains access, provides servicing and the period is very short.
A licence agreement should therefore be drafted to reflect that reality rather than merely to assert it: the provider retains access, allocates and can reallocate space, provides services, and the licensee has a right to use rather than to occupy exclusively.
Where the arrangement in fact gives somebody a defined space they alone control for a period, the honest answer is a tenancy, and structuring it as a licence produces a document that will not survive analysis.
Key features
- Permission to be on land without any interest in it
- Gives no exclusive possession
- Generally revocable in accordance with its terms
- No protection under tenancy legislation
- Does not bind a purchaser as a lease can
- Substance rather than the label determines what it is
How this works in Nigeria
The distinction matters most because of the recovery of premises regime.
A tenant can only be removed through the correct notices and a court order. A licensee whose licence has ended is in a different position, and an operator does not have to run the two notice process to recover a desk in a co-working space.
That is why the structure matters commercially, and why getting it wrong is expensive. A co-working operator whose agreements in substance grant exclusive possession of defined offices for fixed terms at a monthly rent has created tenancies, and removing a defaulting occupant becomes a recovery of premises action with everything that involves.
The same analysis applies to short-lets, market stalls and serviced offices.
The practical drafting response is to make the substance match the label. Retain and exercise a right of access. Allocate space rather than demising it. Reserve the ability to relocate the licensee. Provide services. Keep terms short. And do not describe the payment as rent.
The second Nigerian application is caretakers. A person occupying land with the owner's permission is a licensee, and their occupation is not adverse to the owner, which means time does not run in their favour for limitation purposes. That is precisely why appointing a caretaker protects an absent landowner in a way leaving land empty does not.
And the third is that a licence cannot be used to avoid a tenant's statutory protections. An occupier granted exclusive possession has a tenancy, and a court asked to decide will look at what was given rather than at the heading on the page.
Licence vs lease vs tenancy at will
Three ways somebody lawfully occupies property, in ascending order of security.
A licence is bare permission. No exclusive possession, no interest in the land, revocable on its terms, and no protection under tenancy legislation.
A tenancy at will is occupation with the owner's consent, with exclusive possession, but with no fixed term and terminable at the will of either party. It commonly arises where somebody occupies while a lease is negotiated, or stays on after one ends with consent.
A lease or tenancy gives exclusive possession for a term at a rent. It creates an interest in the land, it can bind a purchaser, and ending it requires the correct notices and a court order.
A person occupying a property should know which they have, because it determines whether they can be asked to leave tomorrow or only after months of process.
Limits and risks
A licence gives the occupier very little security, which is the point and also its weakness for them.
The classification is also not within the parties' gift. Drafting a document as a licence does not make it one where exclusive possession for a term was in fact granted.
A licence does not bind a purchaser of the property, so a licensee can find their arrangement ends when the property changes hands.
And revocation is not always straightforward. A contractual licence revoked in breach of its terms gives rise to a claim, and where a licensee has spent money in reliance on the arrangement, other arguments may arise.
Worth knowing
Make the substance match the label if you are running a co-working or serviced space. A Nigerian operator whose agreements grant exclusive possession of a defined office for a fixed term at a monthly payment has created tenancies, and removing a defaulter becomes a recovery of premises action.
Questions people ask
What is a licence in property?
Permission to be on somebody else's land that would otherwise be a trespass. It gives no interest in the land, no exclusive possession, and it is generally revocable on its terms.
How is it different from a tenancy?
A tenant has exclusive possession for a term and holds an interest in the property, with protection under tenancy legislation. A licensee has permission and holds nothing.
Does calling it a licence make it one?
No. Courts look at what was actually granted. Where somebody has exclusive possession of a defined space for a term at a rent, they have a tenancy whatever the document is called.
What arrangements are genuinely licences?
Co-working desks, market stalls and kiosks, concessions within a larger premises, caretakers occupying with permission, contractors on site, and short-lets where the operator retains access and provides servicing.
Can a licensee be removed without a court order?
A licence that has ended does not require the recovery of premises process a tenancy does. That is the practical reason operators structure arrangements as licences, and why the substance must match.
Why does a caretaker matter to a landowner?
Because a caretaker occupies with permission and is a licensee, so their occupation is not adverse to the owner and time does not run in their favour for limitation purposes.