California License Agreements & Short Term Rentals
What Are They?
California Short Term Rentals: Properties or portion of such properties that are rented for 30 consecutive days or less.
California License Agreements: Grants the licensee permission to use the property for a specific purpose, but does not convey exclusive possession. Licensors/owners of the property typically retain control over the property and can access it as needed.
Do Not Confuse License Agreements With Leases: While both a lease and a license are legal agreements that grant a third party the right to occupy or use a property, they are key differences. a lease grants the tenant exclusive possession of the property for a certain amount of time, however, under a license, the licensee does not have exclusive possession.
Should a Property Owner Use a License or a Lease for a Short Term Rental?
Always consult a California attorney before entering into any legal document.
However, just as a background - the new California case Castaic Studios, LLC v. Wonderland Studios LLC (2023) 97 Cal.App.5th 209 stated that property owners should be aware that if they enter into a license agreement for a short term rental, and the licensee does not pay their “rent”, the licensor cannot file an unlawful detainer action against the licensee because that remedy is exclusively used for leases unless they expressly state that they reserve remedy in the license agreement - but such reservation is not a guarantee .
A General Note Between California Leases and California Licenses
If a California property owner is seeking the full rights and remedies available under landlord-tenant law, a traditional lease agreement may be a good option.
If a California property owner wants to avoid a scenario like Castaic Studios, LLC, DM Law would say that the license agreement should have language reserving the licensor’s right to pursue a unlawful detainer or the property owner should use a lease instead to reflect such rental.
Questions?
PLEASE DO NOT HESITATE TO REACH OUT TO US IF YOU HAVE ANY QUESTIONS OR NEED HELP WITH YOUR CALIFORNIA LICENSE AND/OR CALIFORNIA LEASE!
