A lease agreement is a contract which applies when one party (the lessee) pays another party (the lessor) a specified sum of money in return for the use of an asset. The asset may be real property, in which case the lease agreement may be referred to as a rental agreement. In other cases the asset may be some other asset, such as equipment, machinery or appliances.
Application for business people
Business people are often required to enter into a variety of lease agreements in the course of their daily operations. The most obvious of these will probably be the lease on the premises where the business is physically located, whether this be a shop, factory, market stall or other site.
But lease agreements don’t only deal with land. Many business people find that the purchase price of equipment they need to efficiently run their business is prohibitively high. Leasing enables businesses to use these items without having to incur the high up-front expense. Some examples of items that are leased in this way include: photocopiers and computer equipment; office furniture; machinery; and even smaller items like coffee machines and office plants.
An added advantage of leasing items is that the leasing company will usually be responsible for servicing and maintaining the items. This can save businesses a lot of time and expense.
6 key things to consider
Prior to signing a lease agreement, it is important that you consider the following:
- What exactly are the rights and obligations of each party?
- If the lease is for real property, does the lessor have the right of inspection? If so, how often and are there any conditions?
- Who is responsible for any repairs or maintenance to the leased property? Are there any exceptions?
- What are the payment terms and conditions?
- What is the term of the lease and are there any penalties for breaking the lease early?
- Is the lease able to be transferred to a third party?
Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers
The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.
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