A lease agreement calls for the lessee (user) to pay the lessor (owner) for use of an asset. The lease agreement does not provide ownership rights to the lessee; but states the liability of the lessee for the conditions of the property. Property, buildings and vehicles are common assets that are leased. Industrial or business equipment is also leased. 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 that the car will only be used for personal use.
Common elements of a lease agreement include: names of the parties; the starting date and duration of the agreement; conditions for renewal or non-renewal; specific consideration (a lump sum, or periodic payments) for granting the use of this object; provisions of a security deposit (monetary deposit given typically to a landlord to be held in trust and aside from the rental fee for use should the tenant cause damage to the premises or otherwise breach the terms of the lease) and terms for its return; insurance for loss or damage; sublease (the re-renting of property by an existing tenant to a new third party for a portion of the tenant’s existing lease contract) and maintenance.
KEY VOCABULARY
to abide by
to grant
to hold in trust
lease agreement
lessee
lessor
lump sum
maintenance
non-renewal
ownership
to renew to contract
renewal
security deposit
to sublet
sublease
vehicle
