Understanding Lessors and Lessees

When studying business and finance, it is important to understand the definitions of a lessor and a lessee. A lessor is the party that owns an asset, such as a building, and rents it out to another party. The person or business renting the asset is the lessee.

What Is a Lessor?

A lessor is the owner of the asset, such as a building, equipment, or vehicle that they lease to a lessee. In a commercial setting, the lessor is either an individual or business that owns the asset. The lessor will typically enter into a written lease agreement with the lessee and will receive rent or other forms of payment for leasing the asset. The lessor will usually be responsible for taking care of the asset and managing it while the lessee makes regular rental payments.

What Is a Lessee?

A lessee is the party that agrees to rent or lease an asset from the lessor. The lessee will be responsible for all rental payments on time and for taking care of the asset while in their possession. In a commercial setting, the lessee will typically have the right to use the asset for a defined period of time, and may also have the right to renew the lease agreement at the end of the designated time period.

Conclusion

Understanding the roles of a lessor and lessee is an important part of studying business and finance. Lessors are the owners of the asset that they rent or lease to a lessee, who is then responsible for making rental payments and taking care of the asset. Students learning about business and finance should be sure to understand the difference between a lessor and lessee in order to successfully navigate the world of business.