What is a finance lease?

17th Nov 2009 by Tom Lindmark

A lease is a contract between someone who rents an asset and someone who owns the asset. The owner is referred to as the lessor and the renter is referred to as the lessee. The subject property can take many forms but most often it is real estate or machinery and equipment that are the subject of leases. The contract or lease specifies many things including the rental rate, penalties for late payment, remedies in the event of non-payment, the term of the lease and renewal options, if any. Leases can be simple one or two page documents or they be several hundred pages long. Before signing any lease, the lessee should be sure that they understand all of the obligations that they are undertaking. Courts can and do force lessees to adhere to the terms of a signed lease and the defense of a lack of comprehension is not one that carries much weight. If anything more than a standard lease is being entered into, the advice of an attorney or other professional is worth seeking.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com