A lease is a contract of assignment between two parties, where an owner transfers his asset to another person for use upon payment of remuneration.
The leasing transaction always involves two parties: the lessee, the user of the leased asset who will benefit from it, and the lessor, the party that owns the leased asset, who transfers the rights of use to the lessee.
In other words, this type of negotiation works as a lease with lease lawyer, where one person gives another the right to use an asset for a certain period. During this time, the property may increase in value, benefitting the lessor.
In exchange, the user pays for the use, usually periodically – that is, monthly, semi-annually, or annually.
In addition, during the period in which the property is leased, the lessee becomes responsible for maintenance and expenses related to the asset.
Because of its importance to the economy, it is fundamental to understand what leasing means and its particularities when compared to renting.
What Is The Difference Between Leasing And Renting?
Often, leasing an asset with Sequoia Legal in Colorado can be confused with a simple rental. However, the difference between the two lies in the possibility of the lessee definitively purchasing the asset at the end of the contract.
This option is already given in the lease contract. Through it, the lessee can use part of what was paid during the contract to deduct from the final purchase price.
Many times, people are in doubt about buying or renting something. Renting is paying for use, being cheaper than buying – however, it is always important to be aware of the rental clauses.
But when buying, you have full ownership to do whatever you want with the asset. However, there is a type of operation that works like renting and purchasing simultaneously: leasing.
What Are The Most Common Types Of Leases?
The types of lease are:
- Of Royalties
- Commercial Lease
Firstly, commercial leasing occurs when it is decided to lease commercial locations – such as stores, points of sale, establishments, and commercial properties. Many people want to know how to lease a business but don’t know how the process works. In this case, the owner transfers to the lessee the right to exploit the property commercially upon payment of rent. Therefore, when asking yourself what it means to lease a business, suffice it to say that it is the lease agreement used to use a commercial location.
- Rural Lease
Secondly, the rural lease contract occurs when the tenant acquires the right to use, totally or partially, a rural property. Typically, this type of transaction is intended for agricultural production or related activities.
Also known as leasing, leasing is the most popular form of this type of operation. With it, a bank or commercial company acquires the asset and passes it on for the lessee’s use.
The latter, in turn, pays to use the object in installments and with interest, being able to purchase it at the end of the contract.
Therefore, this type of operation can be considered, in a certain way, a form of financing. In this case, the advantage is the incidence of lower interest rates and the possibility of giving up on the deal without major financial losses.
- Royalty lease
Contrary to popular belief, leasing can also be done over intangible assets – such as patents, innovations, and copyrights.
In these cases, generally, the inventor or owner of the rights does not have the financial conditions to commercialize his good. Therefore, he can lease the rights to exploit the asset to someone upon payment of royalties and for a specified period.