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What is a 'Lessor'

A lessor, in its simplest expression, is someone who grants a lease. As such, a lessor is the owner of an asset that is leased under an agreement to a lessee. The lessee makes a one-time or periodic payments to the lessor in return for the use of the asset.

BREAKING DOWN 'Lessor'

The lease agreement is binding on both the lessor and the lessee and spells out the rights and obligations of both parties. In addition to the use of the property, the lessor may grant special privileges to the lessee, such as early termination of the lease or renewal on unchanged terms, solely at his or her discretion. The lessor is also known as the landlord in lease agreements that deal with property or real estate.

For a lessor, the main advantage of entering into a lease agreement is that he retains the ownership of the property while generating a return on his invested capital. For the lessee, periodic payments may be easier to finance than the full purchase price of the property.

Types of Leases

The leased asset can either be tangible property such as a home, office, car or computer, or intangible property like a trademark or brand name. The lessor in each instance is the owner of the asset. In the case of real estate or a car, the lessor is the property owner or automobile dealer respectively; in the case of a trademark or brand name, the lessor is the company that owns it and has conferred the right to use the trademark or brand name to a franchisee.

Some lessors can also grant a "rent-to-own" lease whereby some or all of the payments made by the lessee will eventually be converted from lease payments to a down payment on the eventual purchase of property. This type of arrangement usually occurs in a commercial context, for example when leasing large industrial equipment.

Real Estate Leases

The most common type of lease is for homes or apartments that individuals and families live in. Because housing is an important matter of public policy, many jurisdictions have created governing bodies that regulate and oversee the legal relationships and acceptable terms of leases between lessors and lessees in this field.

For example, in the state of New York, the New York State Division of Housing and Community Renewal (DHCR) is responsible for administering rent regulation in the state, including New York City. This responsibility includes both rent control and rent stabilization.

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