Formally document licensing agreements.
A property owner who orally grants a neighbor permission to use her land may be giving up more than she thought. Although she may have intended to grant her neighbor a free license, she may have inadvertently created something akin to an easement. The difference is important because a license is personal to the licensee and generally revocable at any time. An easement, however, runs with the land and binds successors. To avoid unintended results, landowners should formally document their agreements.
A license is created when one landowner grants another permission to use the former’s land. The license may become irrevocable when a licensee expends money or labor in reasonable reliance on the continued existence of the privilege. The Vermont Supreme Court has recognized the validity and existence of irrevocable licenses on multiple occasions. In Carbonneau v. Lague, Inc., 134 Vt. 175, 177 (1976), for example, the Court recognized that irrevocable license was created after the licensee invested money to erect guy wires to support a boom derrick he was permitted to use on the licensor’s land. In Guilbault v. Bowley, 146 Vt. 39 (1985), the Court similarly found an irrevocable license after the licensee installed a water line on licensor’s land in order to convey water from a spring the licensee had permission to use.
Although they are distinctly different concepts, and not always correctly distinguished by the courts, an irrevocable license is akin to an easement by estoppel. See Tallarico v. Brett, 137 Vt. 52, 60 (1979) (recognizing that irrevocable licenses and easements by estoppel are grounded in different legal theories). Both doctrines are based on notions of estoppel or fraud, and irrevocable licenses derive from the understanding that it is inequitable to revoke a license when the licensee has changed position in reliance on the license.
Courts approach irrevocable licenses with caution, recognizing them only when necessary to prevent injustice and restore equity. In Vermont, for example, an irrevocable license continues only for so long as necessary to protect the licensee’s reliance investment. See Phillips v. Cutler, 89 Vt. 233, 235 (1915) (recognizing license to operate a spring aqueduct for “ordinary life of the aqueduct”). Other courts have also required a demonstration that a licensee’s reliance was reasonable, or that the licensee’s reliance was great and involved substantial sums of money or considerable labor. Still others have required that the licensor have knowledge of the licensee’s improvements or have given express permission to make the improvements, or that the licensor benefit from the improvements as well. In short, the courts might consider a litany of factors in determining whether an irrevocable license is necessary to prevent injustice.
Landowners can avoid giving courts such discretion by memorializing their agreement in writing. A documented agreement can define the nature, scope and duration of the grant. It can specify whether improvements can be made, the circumstances under which the agreement is transferrable, and the conditions of its termination. A properly worded license agreement can remove some of the uncertainty associated with judicial review and increase the likelihood that a court will correctly interpret an agreement between two landowners.