Deadlines & Consequences

Commercial Corner

Kristin E. Rosan
Partner, Madison & Rosan, LLP Attorneys at Law

 

 

A short-term lease is generally a lease that can be performed in six months or less or is a month-to-month lease with no specific termination date. Such leases benefit tenants inasmuch as they do not bind the tenant to a long lease term. Conversely, they can be more expensive, to reimburse the landlord for the costs associated with frequent turnovers.

Short-term leases should not be confused with license arrangements where the premises are rented for a few nights or a week. What is the difference between a license and lease?

A “license” is a personal, revocable, and non-assignable privilege, conferred either by writing or parole, to do a particular act or series of acts upon another’s land without possessing any estate therein.1 One who possesses a license pertaining to real estate has authority to enter the land in another’s possession without being a trespasser. 2 A license does not create an interest or estate in land.3 A “licensee” is a person who enters the premises of another by permission or acquiescence, for his own pleasure or benefit.4 By way of example, a hotel guest is a mere licensee who acquires rights, but without passing any proprietary interest in, the land.5

A “lease” is a contract (written or oral) which gives a tenant the exclusive use of the premises for a period of time in exchange for payment to the owner of the premises, the landlord. Actions to recover possession of the premises from the tenant are typically governed by statutes affording tenants notice and an opportunity for a hearing in advance of the landlord’s recovery of possession.

Examples of scenarios where licenses are granted as opposed to a short-term lease of the premises are a hotel, even extended stay, vacation rental, and a hunting license. Generally, persons dealing in the issuance of licenses are not required to be licensed as real estate agents. However, persons managing short-term leases or who represent tenants, are generally required to be licensed agents.

When contemplating short-term leasing, consider whether the interest you intend to convey is merely a license (right to use for a short time period) or a lease (giving the tenant sole possession of the premises). Each choice comes with differing rights and responsibilities for both the landlord/licensor and the tenant/ licensee.

1Mosher v. Cook United, Inc. (1980), 62 Ohio St. 2d 316.

2Rodefer v. Pittsburg, O.V. & C.R. Co. (1905), 72 Ohio St. 272.

3Scott v. Spearman (1996), 115 Ohio App.3d 52, 684 N.E.2d 708.

4Ripple v. Mahoning Nat’l Bank (1944), 143 Ohio St. 614.