What is a lease agreement

By | September 26, 2011

A lease agreement is a contract that is drawn between the user or lessee and the owner for the purpose of using an asset. The lease agreement is for both tangible property and intangible property. The lease for tangible property requires a rental agreement. Intangible property can range from cell phone provisions to computer programs. Lease agreements are also drawn out for flat and apartment rentals by landlords.  There are two kinds of leases: a cancellable and non-cancellable lease. A lease agreement can be cancelled by drawing a cancellable lease which can be terminated according to the owner or lessee’s required unlike a non-cancellable lease agreement. There are specific guidelines that need to be followed while drawing a lease agreement:

  • The names of both the owner and the lessee need to be clearly mentioned in the agreement.
  • The time period of the lease agreement should also be stated. The starting date and the duration need to be specified.
  • The asset to be leased need to be identified in the agreement. This can be done through VIN, model number etc of the object leased.
  • There should be clauses for renewal or non-renewal of the property leased for future convenience.
  • There should be specific mention of the type of payment that is expected. This can be done through installments, monthly rent etc. The use of the object requires a certain amount of fee.
  • There should be provisions made for terms of the asset’s return and for security deposit
  • There should be conditions mentioned incase of mishandling or destruction of property.
  • Insurance information, restrictions and maintenance conditions should be included in the lease agreement.

The lease agreement is of various types and hence it should be stated clearly. Hiring an attorney for drawing this agreement is also advisable.

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