A Business Encyclopedia

Types of Leases

Definition: The Lease refers to the contractual agreement between the two parties, lessor and lessee, wherein the lessor, the owner of the property grant lessee the right to use his property for a particular period of time in exchange for the periodical rental payments.

There are different types of leases that can be classified on the basis of the extent to which the risks and rewards of ownership are transferred, a number of parties to the agreement, domiciles of the lessor, lessee and the equipment manufacturer, etc.

Types of Leases

Types of Leases

  1. Finance Lease Vs Operating Lease
  2. Sale and lease back Vs Direct Lease
  3. Single Investor Lease Vs Leveraged Lease
  4. Domestic Vs International Lease

Now the question may arise, that what is the difference between lease and rent? The lease is an agreement wherein the lessee has the right to occupy the lessor’s property for a set time duration and no changes can be made therein without the consent of both the parties. While in the case of a rental agreement, the tenancy is for a short time duration (30 days) and the landlord can make changes in the agreement any time with a written notice to the tenant. Also, this agreement gets automatically renewed until and unless a landlord, or the tenant ends it through a written notice, which is not with the lease agreement as it does not get renewed on its own.

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