Lease

Definition

A lease is a contractual agreement where one party (the lessee) pays the other party (the lessor) for the use of an asset, typically real estate or equipment, for a specified period. It outlines the terms and conditions under which the property may be used.

5 Must Know Facts For Your Next Test

1. A lease agreement typically includes details such as the duration of the lease, monthly payment amount, and responsibilities for maintenance.
2. Breaking a lease early can result in penalties or fees as stipulated in the contract.
3. Leases can be either fixed-term, with a set end date, or month-to-month, which continue until either party terminates them.
4. Security deposits are commonly required at the start of a lease to cover potential damages or unpaid rent.
5. Renters' insurance is often recommended or required by landlords to protect against personal property loss and liability.

Review Questions

• What is typically included in a lease agreement?
• What are the potential consequences of breaking a lease early?
• How does a fixed-term lease differ from a month-to-month lease?

Related terms

Lessor: The party who owns the asset and grants the right to use it under a lease agreement.

Lessee: The party who obtains the right to use an asset by agreeing to pay for it under a lease agreement.

Security Deposit: A sum of money held by the lessor to cover any damage or unpaid rent during the term of the lease.