With a lease, the lessor is the entity or person that owns the possession, item, or asset. The original lessee is the person paying to use the item.

The lease is a contract that claims the lessor allows the use of the asset for a specific time period if the payments are made appropriately, and any other conditions are met. Find out how the lessee and lessor enter into the relationship for a commercial lease or any other type.

Legal Definition and Example of Lessor

In the English language, a lessor is the owner of something and agrees to rent it. Typically, the lessor issues a lease agreement so that the lessee can use the asset. This person may also live in the property, drive a car for a specified period, and more. The contract must include information about rent or periodic payments and anything else relating to the property.

Here are a few important bits about the word lessor:

  • The etymology and history of lessor - Middle English = lessour
  • First known use of the term - 14th century

You might want to move a small business into an office. The lessor could be the owner of the building. When both people agree on the property, the lessor creates an agreement outlining the rules for using it and the costs. That means the other person is the lessee or tenant and is responsible for the payments to use the property. The same applies to a car or truck. The lessor could be the car dealership owner or a private party.

Both parties should pay attention to the terms within the lease. They could include consequences or fines for ending the contract too early. Often, the lessor offers longer terms for lower payments so that they have less work to do to get a new tenant in the property.

For example, you could get a discount if you signed a two-year contract instead of a 12-month one.

How a Lease Agreement Works for Real or Personal Property

Renting allows one person to turn an asset into a steady income by leasing it to those who require it.

The agreement should be reviewed and signed by each party and ensures many things. For one, it establishes the responsibilities and rights of the lessee and lessor. With that, it explains whatever consequences there are if the deal goes south, such as fees and penalties, an eviction, or even repossession.

Typically, at the end of one term, the lessee can find new arrangements or renew after the contracted period is over. With that, the lessor can keep the tenant, find a new one, or do something different with their asset, such as sell it or use it for personal reasons.

Ensuring the Rights of the Lessee

In most cases, lessors are obligated to ensure the rights of their lessee through the contract. For example, lessors leasing residential rental properties should include terms about their responsibilities.

Landlord obligations do vary between states, but a basic set of rights are here to protect lessees. That way, they can seek legal restitution if the lessor doesn't provide maintenance on the property as per the agreement.

A lessor working in commercial real estate may also have legal responsibilities to the lessee.

Who Leases Property?

For properties, a landlord often grants a lease and becomes the lessor, but they also own the property or building. However, the structure may belong to an estate or company, in which case the entity leases it.

Leasing vs. Renting

The terms "lease" and "rent" are often interchangeably used, but there could be a significant distinction between them. When there is, tf often falls to the rent paid to the lessor by the tenant.

Rental Agreement

This is an umbrella term to indicate any short-term usage of another person's asset. With that, it is frequently used for vehicles and real estate, including boats and machinery. Thereby, the tenant or lessee must rent the item and pay for its use.

Lease Agreement

Ultimately, this term refers to a rental commitment lasting a long period, such as six to 12 months. However, it could focus on day or hourly rentals where everything is paid for at once. Generally, it focuses on monthly payment cycles.


The lessor is the owner of the asset that gets used by another party in exchange for payments. With that, leasing agreements determine how the lessor interacts with the lessee, including their responsibilities, rights, and any consequences for reneging on the agreement.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!