Lease - Definition, What is Lease, Advantages of Lease, and Latest News - ClearTax (2024)

Introduction

A lease refers to a contract where one party grants a right to use a property or land to another party in return for consideration and for a specific period of time. Both the parties enter into a lease agreement specifying the terms and conditions of the agreement. The party who owns the leased premises or property is the lessor. The party accepting the leased property is the lessee.

Understanding Lease

Lease agreements are legal documents and bind on the lessor and the lessee. The lease agreement sets forth the terms and conditions on the lease. The consideration for the lease and the period of the lease are part of the agreement. Other conditions include the responsibilities of the lessor and the lessee, deposit, due dates, consequences in case of violation of the lease.

The lease agreement guarantees the rights and obligations as between the lessor and lessee. Either party to the agreement can sue each other for non-performance of any terms and conditions of the agreement. The agreement also specifies the notice period for vacating the leased property.

One lease agreement may be different from the other. However, certain terms and conditions are the same, such as the clause on the amount of rent, names and address of the lessor and lessee, due dates, and notice period. The lessor and lessee both sign the lease agreement and date the same.

A lease agreement may be for a residential property or a commercial property. In the case of commercial properties, the lease agreements can contain complex terms and conditions. A commercial lease can be for the use of the premises with furniture and fittings. The agreement can be longer than the usual duration. There may be other conditions for the use of the property, including sub-letting to another party.

Conclusion

It is preferable that both the lessor and the lessee have an original copy of the lease agreement for records and reference purposes. The agreement is a legal document which facilitates resolution of disputes if any between the lessor and the lessee. The agreement generally requires the lessee to pay the utility charges. Certain leases have fixed terms, while others may allow for early termination of the lease.