Leases v. Licenses v. Easements

Last Updated on Friday, 13 April 2018 09:06 Written by Chris Griswold Friday, 13 April 2018 09:06

Knowing the basics pays dividends.  At some point, it will make a big difference in the outcome of one of your deals.  Accordingly, we’re going to review some of the basic differences between leases, licenses and easements.  Why?  Each vehicle has its own different strengths/weaknesses and I’ve seen each used within the wrong context.  Read more below….

Leases v. Licenses v. Easements

Revocable? Perpetual? Assignable?
Lease No No Yes
Easement No Yes n/a
License Yes No No

Absent certain language within the document and/or certain special circumstances, the foregoing table quickly summarizes the basic, legal discrepancies between each type of vehicle.  What practical effect do these differences have on you?

Parking Situations:  I’ve seen property owners grant easements to other adjoining property owners for parking space.  While this may sometimes be in the best interests of the granting property owner, it’s usually not.  Why?  Easements are not usually revocable and are usually perpetual (which makes the issue of whether they’re assignable moot).  This all makes granting a parking easement a little risky since you might not like the future owners of the adjoining property.  Instead, you’d probably want to use either a lease or a license – depending upon the situation.

Vacating Right of Ways:  I’ve seen back-to-back property owners discuss the possibility of jointly vacating an alley (which would result in each property owner getting back their half of the alley) just to overlook the possibility that, unless they enter into a “reciprocal easement agreement” at the time of vacation, the other property owner could ostensibly fence off their half of the alley thereby constructively blocking off the other’s access to the back of their building (depending on the width of the alley).  In other words, granting each other mutual leases or licenses upon the other’s land won’t long-term protect either them or their respective successors (since neither a lease nor a license is perpetual in duration).

Snowcone Stands, Parking Lot Nurseries, Christmas Tree and Pumpkin Lots:  The big things here are: 1) seasonal/temporary use, and 2) your familiarity with the operators.  It’s okay for a property owner to grant a lease to an operator they’ve done business with for years for a 6 month term (i.e., Spring through Summer) to sell plants or to serve snow cones.  However, it’s likely unwise to grant a lease to a new and unknown operator who wants to sell pumpkins for just a few weeks.  Why?  As a property owner, you won’t mind granting the lease with a hard, irrevocable, 6 month term to the repeat operator, but, with the new operator who only needs the space for a month or so, you’d probably want to use a license in order to retain the right to quickly revoke an unworkable/undesirable situation – especially since the term is so short….

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“I take special care when selecting business partners to represent my company and look for those who exhibit the same levels of professionalism and integrity that I try to achieve.  Chris Griswold definitely meets these requirements and is considered a very valuable member of the JOBO Properties team.  I have no hesitation in recommending Mr. Griswold to handle your business and commercial real estate transactions.”

Darren Ford / Owner & Developer of JOBO Properties, L.L.C. / Oklahoma City, Oklahoma

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Lot Lines: Disaster lessons for property owners

Last Updated on Thursday, 6 October 2016 02:05 Written by Chris Griswold Monday, 20 June 2016 02:49

Courtesy the Journal Record
by Ted Streuli

There were two tragic incidents in Orlando, Florida, this week: the mass shooting at a nightclub that left 50 people dead and a 2-year-old killed by an alligator on Disney property.

I asked Oklahoma City attorney Chris Griswold what commercial property owners and managers can do to limit their liability in such extraordinary circumstances.

The property owner might not have liability in the nightclub shooting, but it’s something an owner would like to prevent. Oklahoma allows licensees to carry firearms, but Griswold said that can be prohibited by a commercial landlord. The owner or his agent must post a sign saying guns are not allowed on the property, and it then applies to any part of the privately owned building that’s open to the public. That means if it’s posted, no one except law enforcement officers can carry a gun into reception areas, elevators, hallways, dining spaces or other public places.

There are exceptions, Griswold explained. Landlords can’t prohibit gun owners from locking their weapons in their cars parked on the property, and they can’t prohibit a tenant whose office is not open to the public from carrying a gun if he can enter without passing through a public space.

For multifamily housing, there would have to be a stipulation in the lease.

Carrying a gun into a privately owned building that prohibits firearms is not a criminal act. The landlord may order the person off the premises; if he doesn’t comply and the police are called, he can be fined $250. The penalty isn’t stiff, but landlords and their property managers who have posted the appropriate sign have the right to remove people who are armed.

As for the alligator incident, Disney’s lawyers have likely been hunkered down, frantically looking for a way to minimize the company’s liability. As Griswold noted, the whole point of Disney is to entertain families with children, and the company has a responsibility to do so in a safe manner.

The family assumed no risk of a gator attack, and they may argue that no reasonable person would expect an alligator to come after a child on theme park property. Disney could have marked the dangerous area or hired a company to remove the alligators. At the very least, they could have posted warning signs.

Having warned the public that a danger exists, said Griswold, can help mitigate the liability when something goes wrong.

Read more: http://journalrecord.com/2016/06/16/lot-lines-disaster-lessons-for-property-owners-opinion/#ixzz4C8CEU1Ob

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Sellers Using AAI (All Appropriate Inquiry) to Manage Risk

Last Updated on Thursday, 14 July 2011 04:03 Written by Chris Griswold Wednesday, 1 September 2010 09:24

If you’re somehow involved in the commercial real estate business, you’ve become familiar with the concept of “All Appropriate Inquiry,” otherwise referred to as “AAI.”  The Environmental Protection Agency has promulgated AAI to, more or less, increase the steps which a reasonable buyer should take in the process of determining/evaluating whether the property they’re buying is, to the extent possible, free of excessive hazardous material.  Today, I want to expand the way people have traditionally viewed AAI.  Read more below….

Sellers Using AAI To Manage Risk

You already know that conducting a Phase I is, as a rule, required of any buyer in order to, among other things, determine a current “baseline” at the time of purchase.  Moreover, you know that the engineering firm conducting the Phase I will usually advise the buyer whether a Phase II is, in their opinion, necessary.  Accordingly, people have come to view AAI as really a safeguard for buyers.  However, sellers should consider the benefits of having a Phase II conducted at their own cost and expense – regardless of the engineering firm’s recommendation.  Why?

First, most purchase contracts make the seller indemnify the buyer for the presence and clean-up of hazardous materials.  As the seller, when you weigh the risks associated with indemnifying the buyer against the time delay, inconvenience and expense of conducting a Phase II, sometimes, it might just be worth it to go that extra step in establishing a “harder” current baseline.  Maybe not in every deal, but, for certain deals (e.g., where the property is adjacent to I-3 or a strip of railroad tracks), you may sleep better knowing that you conducted a Phase II so as to better prevent that baseline from “moving around” in the future.

Second, just because the current buyer’s specific uses/needs don’t trigger any alarms after the completion of their Phase I study doesn’t mean that some future, subsequent purchaser’s specific uses/needs won’t call your current “baseline” into question when hazardous materials eventually appear on the property (and odds are they will) and every other owner in the chain of title throws up their hands and says “…we didn’t do it.”  That’s when your Phase II looks really good against a bunch of other Phase I’s….  Something to think about.

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“I commend Chris Griswold for his efforts in a recent transaction for keeping distant legal departments of large companies informed.  Chris has always been a real asset in bringing people together and he has the ability to center the focus on the transaction.  It’s good to have qualified, energetic, and capable legal support ready to move the process along.  My thanks to Chris for his efforts in this most recent transaction.”

Irmon Gray / Broker / NAI Sullivan Group / Oklahoma City, Oklahoma

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