Lease Agreements: Important things to consider
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?
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Joe Kafrouni, Accredited Specialist in Business Law, Kafrouni Law
Disclaimer: This article is general information only and is not legal advice. Before acting on it, get advice on your own circumstances. To the extent the law allows, Kafrouni Law accepts no liability for any loss arising from reliance on it. This article is the copyright of Kafrouni Law.
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