Two recent residential cases highlight the crucial distinction between leases and licences, and the importance of ensuring that documentation accurately reflects the true arrangement for occupation of both residential and commercial properties. In both cases, the fact that the occupier had control of a key to lockable premises was relevant to the question of whether or not the occupation was as licensee or tenant, but not decisive.

In Camelot Property Management Limited (1) Camelot Guardian Management Limited (2) v Greg Roynon, Mr Roynon was allowed into occupation of two rooms of a vacant care home under a licence. The agreement did not grant exclusive possession and provided considerable flexibility over which rooms were to be occupied, however only Mr Roynon had a key to the relevant rooms. The agreement contained some restrictions on use including a prohibition on visitors staying at night and a maximum number of visitors, but the Court did not consider these to be incompatible with exclusive possession. As Mr Roynon could exclude all others from the rooms, including the owner, it was held that he was a tenant with statutory protection.

Conversely in the Court of Appeal case, Watts v Stewart and others, it was held that the occupiers of charity premises who had been granted a "lease" were in fact licensees as they did not have exclusive possession. The Court distinguished between exclusive possession, which will indicate a lease, and exclusive occupation. A tenant must be able to exclude all others, including the landlord, from the property. Control of the key is an indication of this, but is not determinative. The determining factor was an express provision that the occupier had no legal interest in the property together with a requirement for the occupier to notify the owner of any absences of 28 days or more.

These cases again demonstrate the principle that the label given to a document will not conclusively determine its status - a licence was held to be a lease and a lease constituted a licence. Both parties need to ensure that the basis of any occupation is carefully considered and documented to avoid entering into a legal arrangement which is not what was intended.