Holiday Home Purchases

One specific type of licence agreement, called a “pitch licence agreement”, will be entered into between the owner of a holiday home (or lodge) and the holiday park owner as both parties will be looking to set out each other’s rights and obligations. Both parties will have legal rights and responsibilities and the agreement will contain various elements including how long the lodge can be on the site for, the amount of the pitch fees and how they are determined as well as providing for the park owner’s obligations in exchange.

Holiday or Residential

One of the main points to be highlighted is that holiday home parks are only used for holidays as their name indicates and not for residential purposes. A pitch licence agreement will therefore cover only the terms of an agreement with a holiday park.

There is a simple and quite clear difference between a holiday home park, for holiday use only, and a residential home park, available all-year round. The consequences for the use of a holiday home for residential purposes could be for the lodge owner to be evicted and the park owner to potentially lose its licence.

Terms of the Licence Agreement

There are important terms to consider and be cautious about before entering into a licence agreement. These include, but are not limited to:

• the term of the licence agreement – how long is the pitch for and can it be renewed? Most of the time, there is no security in tenure which means that the agreement will have a clear start and end date;
• the annual pitch fee;
• the payment requirements;
• the conditions imposed by the local authority and whether they are likely to affect the lodge owner;
• the insurance requirements – is the lodge owner required to insure through an insurance policy arranged by the park?;
• the termination provisions (i.e. who can terminate, notice length or refunds policy);
• the disputes procedures put in place by the park;
• potential exclusion of liability for the park owner; and
• whether the lodge owner is allowed to sale the lodge and under which conditions.

As the lodge owner, it is important to understand all the terms of the agreement before signing to make sure that the agreement correctly reflects what has been agreed between the parties and to mitigate against the lodge owner being prejudiced due to unfair terms.

It is therefore highly recommended to seek independent legal advice before entering into a licence agreement. The Corporate Commercial Team at Franklins has experience assisting both sides of a licence agreement and has a wide range of experience in advising on the terms of a licence agreement and negotiation of the same.