Lease

For other uses, see Lease (disambiguation).

A sign in Chicago offering space for lease

A lease is a contractual arrangement calling for the user (referred to as the lessee) to pay the owner (referred to as the lessor) for the use of an asset.[1] Property, buildings and vehicles are common assets that are leased. Industrial or business equipment are also leased. In essence, a lease agreement is a contract between two parties: the lessor and the lessee. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments.[2] The lessee also agrees to abide by various conditions regarding their use of the property or equipment. For example, a person leasing a car may agree to the condition that the car will only be used for personal use.

The term rental agreement can refer to two kinds of leases:

  • A lease in which the asset is tangible property.[3] Here, the user rents the asset (e.g. land or goods) let out or rented out by the owner (the verb to lease is less precise because it can refer to either of these actions).[4] Examples of a lease for intangible property include use of a computer program (similar to a license, but with different provisions), or use of a radio frequency (such as a contract with a cell-phone provider).
  • A periodic lease agreement (most often a month-to-month lease) internationally and in some regions of the United States.[5]
  1. ^ Stickney and Weil 2007 p. 791 (Glossary of Financial Accounting: An Intro. to Concepts, Methods, and Use 12e).
  2. ^ "Accounting for leases | F7 Financial Reporting | ACCA Qualification | Students | ACCA Global". www.accaglobal.com. Retrieved 12 December 2017.
  3. ^ 34 Am. Jur. 2d Federal Taxation ¶ 16762 Section 467 rental agreements defined: "A rental agreement includes any written or oral agreement that provides for the use of tangible property and is treated as a lease for federal income tax purposes."
  4. ^ It is possible to rent in such a way many things such as domestic animals, electrical appliances, handbags and jewelry."If you want it, rent it ... from a 'must have' handbag to an Aston Martin", The Observer, 2009-01-04. Retrieved on 9 September 2009.
  5. ^ California, Department of Consumer Affairs, State of. "California Tenants - California Department of Consumer Affairs". www.dca.ca.gov. Retrieved 12 December 2017.{{cite web}}: CS1 maint: multiple names: authors list (link)