BUSA 364 Lecture 5: Contracts of Lease & leasing
3 Apr 2016
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A lease separates ownership of property (which remains with the owner or lessor) from the right to use it, which is granted to the user or lessee. The lessor retains ownership throughout the term of the lease and the right to use the property returns to the owner upon termination of that lease. An alternative means to acquire equipment, especially when there is sufficient capital to fund an outright purchase. Leasing only covers moveable property used for business purposes. Must be for a finite term determined in advance. Typically includes buy-back, renewal or trade-in options at the end of the lease. In addition to paying rent, lessee has obligation of prudence and diligence. Ensuring proper supervision of property in case of prolonged absence. Neither the lessee nor the lessor can change the destination (intended purpose), e. g. , from residential to commercial. Neither the lessee nor lessor can change the physical form of the property during the term of the lease.
