What is a lessor?
A landlord, in its simplest form, is someone who gives someone else a lease. As such, a lessor owns property leased under an agreement to a tenant. The tenant makes a single payment or a series of periodic payments to the lessor in exchange for the use of the asset.
Understanding a lessor
A lessor can be a natural or legal person. The rental contract he or she concludes with another party binds both the lessor and the tenant and sets out the rights and obligations of both parties. In addition to the use of the property, the lessor may grant special privileges to the tenant, such as early termination of the lease or renewal on unchanged conditions, only at its discretion.
For a lessor, the main advantage of concluding a rental contract is that it retains ownership of the property while generating a return on its invested capital. For the tenant, periodic payments may be easier to finance than the total purchase price of the property.
Key points to remember
- A lessor is the owner of property rented or leased to another party, known as a tenant.
- Lessors and tenants conclude a binding contract, known as a rental contract, which defines the terms of their agreement.
- Although any kind of property can be rented, the practice is most often associated with residential or commercial real estate – a house or an office.
Types of leases and lessors
In the public mind, leases are generally associated with real estate – a rented residence or office. But in fact, almost all types of assets can be rented. It can be tangible property such as a house, an office, a car or a computer, or intangible property such as a brand or brand name. The lessor in each case is the owner of the asset.
For example, in the case of real estate or a car, the lessor is respectively the owner or the car dealer; in the case of a brand or brand name, the lessor is the company which owns it and has conferred the right to use the brand or the brand name on a franchisee. When used in the road transport industry, the lessor designates the owner of a commercial motor vehicle who contracts with the entity that holds the operating authority for the use of the vehicle.
Certain lessors may also grant a rental contract with option to purchase under which part or all of the payments made by the tenant will eventually be converted from the rental payments into a deposit on the possible purchase of the rented item. This type of arrangement generally occurs in a commercial context – when renting large industrial equipment, for example. But it is also common in a context of consumption with automobiles, and even with residential real estate.
The lessor is also known as the owner in rental contracts that deal with real estate or real estate.
Special consideration for donors
The most common type of rental is for houses or apartments in which individuals and families live. Because housing is an important public policy issue, many jurisdictions have created governing bodies that regulate and supervise legal relationships and acceptable terms of leases between lessors and tenants in this area. For example, in New York State, the New York State Housing and Community Renewal Division (DHCR) is responsible for administering rent regulation in the state, including New York. This responsibility includes both controlling rents and stabilizing rents.