Include 11 Standard Provisions in Parking Lot License Agreement

If you’re considering allowing a seasonal or short-term business to set up shop in a portion of your parking lot, make sure that you use a license—not a lease—to do this. While business-related events, like car shows, book sales, or Christmas tree sales can boost traffic to your center, and your bottom line, it’s important to nail down some standard provisions in the license agreement so that you can get the full benefit of these opportunities.

If you’ve licensed space to a business that operates within hallways or other interior portions of your center, such as kiosks or retail carts, you already have a standard form of license agreement. Your parking lot license agreement should include those protections and requirements typically found in your standard form of license agreement for interior licensees. Make sure that, like your standard license agreement, your parking lot license agreement does the following 11 things:

• Gives you the right to revoke the license on short notice;
• Lists the licensee's required hours of operation;
• Requires the licensee to pay a license fee and security deposit, get needed permits and approvals, and comply with the law;
• Indicates where notices are to be sent;
• Sets restrictions on the licensee's signage;
• Bars or limits assigning and subletting by the licensee;
• Requires the licensee to have adequate property and liability insurance, and indemnify—that is, reimburse and defend—you against third-party claims;
• Bars the licensee from making noise or creating offensive odors, and altering the license area;
• Gives you the right to enter the license area to make repairs, improvements, or additions;
• Spells out your remedies if the licensee defaults; and
• Limits your liability to your interest in the land and buildings making up the center.

For a discussion about how to determine whether a license is right for your available space, what terms to include and avoid when drafting a license agreement, model language you can use when negotiating this unique type of arrangement with a prospective tenant, and tips on how your property manager can make sure that a licensee’s operations run smoothly, see the Insider’s Special Issue: License Agreements, available at www.commercialleaselawinsider.com.

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