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. Lessee

    The person who rents land or property from a lessor. The lessee ...
  2. Minimum Lease Payments

    The lowest amount that a lessee can expect to make on a lease ...
  3. Open-End Lease

    A rental agreement that obliges the lessee (the person making ...
  4. Sandwich Lease

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

    A legal document outlining the terms under which one party agrees ...
  6. Bargain Renewal Option

    A clause in a lease agreement that gives the lessee the option ...
Related Articles
  1. Personal Finance

    Who is a Lessor?

    A lessor is the owner of an asset that is leased.
  2. 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.
  3. Managing Wealth

    What is a Capital Lease?

    A lease considered to have the economic characteristics of asset ownership.
  4. 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.
  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

    When Is Buying A Car Better Than Leasing?

    People who lease a car are often more concerned with the short-term picture.
  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. Insights

    Companies With Big Hidden Debts

    Companies with off-balance sheet debt will be brought to light when new rules come into effect in 2019.
  9. Investing

    New Wheels: Lease Or Buy?

    These two major ways to obtain a car have very different advantages and drawbacks. Find out which is best for you.
  10. Investing

    Uncovering Hidden Debt

    Understand how financing through operating leases, synthetic leases, and securitizations affects companies' image of performance.
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. What kinds of real estate transactions use triple net (NNN) leases?

    Learn how a net-net-net or triple net lease works and why it is popular in commercial real estate transactions. It is also ... Read Answer >>
Hot Definitions
  1. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  2. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  3. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  4. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  5. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
  6. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly AIMR) that measures the competence and integrity of financial ...
Trading Center