Loading the player...

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.

RELATED TERMS
  1. Leveraged Lease

    A lease agreement that is partially financed by the lessor through ...
  2. True Lease

    A specific type of multi-year lease which does not pass on ownership ...
  3. Minimum Lease Payments

    The lowest amount that a lessee can expect to make on a lease ...
  4. Step-Up Lease

    A step-up lease is a lease agreement which stipulates that the ...
  5. Sandwich Lease

    A lease in which a party rents property from the property owner ...
  6. Lease

    A legal document outlining the terms under which one party agrees ...
Related Articles
  1. Investing

    How Does a Lease Work?

    A lease is an agreement between two parties where the lessor owns property that it allows the lessee to use pursuant to terms of the agreement.
  2. Managing Wealth

    What is a Capital Lease?

    A lease considered to have the economic characteristics of asset ownership.
  3. Managing Wealth

    Why You Should Buy A Car Instead Of Leasing

    While leasing has certain advantages, buying a car tends to save you money in the long run and offers greater flexibility.
  4. Managing Wealth

    When Is Leasing A Car Your Best Bet?

    Leasing a car isn't right for everyone. But it's attractive for those who want low initial payments and the ability to get a new vehicle every few years.
  5. Personal Finance

    Is There a Way to Get Out of Your Car Lease Early?

    For those who no longer want their car for whatever reason, transferring the lease to an interested party can be a particularly appealing choice.
  6. Personal Finance

    What Are the Costs of Leasing Vs. Buying a Car?

    The cost difference between buying versus leasing a vehicle can be tens of thousands of dollars over a lifetime
  7. Retirement

    Retirees: Should You Buy or Lease Your Car?

    To buy or lease – that is the question. For retirees, access to safer cars, comprehensive warranties and tax deductions may drive up leasing's appeal.
  8. Investing

    Uncovering Hidden Debt

    Understand how financing through operating leases, synthetic leases, and securitizations affects companies' image of performance.
  9. Managing Wealth

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
  10. Managing Wealth

    Your Lease Is Up: When Should You Buy The Car?

    In general, the fact that you know the car is to your benefit. Before deciding, compare the buyback price to what the car would go for on the open market.
RELATED FAQS
  1. Why might a bond agreement limit the amount of assets that the firm can lease?

    Bond covenants can limit the amount of leases a company can have because leasing contracts are a form of debt. Taking on ... Read Answer >>
  2. What types of assets may be considered off balance sheet (OBS)?

    Learn about what types of assets are often accounted for using the off-balance-sheet method and why this accounting technique ... Read Answer >>
  3. What are the differences between single, double and triple-net leases?

    Learn the ins and outs of net lease agreements, including the key differences between single net, double net and triple net ... Read Answer >>
  4. At the beginning of the year, HIJ Corp. began to lease new equipment ...

    The correct answer is: b) Total Lease Payment = Interest expense + Principal repayment Step 1: Interest expense = 8.5% of ... Read Answer >>
  5. You are currently reviewing the following information for JKL Corp ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
Hot Definitions
  1. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  6. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
Trading Center