Legal terms can be confusing and ambiguous. For example, understanding lessor vs. lessee can be a challenge when talking about lease management. The terms sound similar and can be mistakenly interchanged, causing complications.
Through this blog, you will be able to understand the meaning of lessor and lessee and tell the difference between the two entities as far as leases and lease management is concerned.
Let's begin with understanding who a lessee and a lessor are.
In a lease agreement, a lessee is an entity that is given the rights of use of the property or equipment for the time period mentioned in the agreement.
For the term mentioned in the lease agreement, the possession of the asset transfers to the lessee. The term depends on the nature of the asset.
For example, for a manufacturing facility, the land lease would be for a longer term as compared to an apartment rental lease.
The person who has legal ownership of an asset or a property is called the lessor. It is the lessor’s responsibility to draw up a lease agreement based on mutual discussions with the entities involved and execute a lease.
Since the lessor is the owner of the property (or asset), all the taxation, maintenance, and accountancy liabilities are their responsibility.
The major difference between a lessor and a lessee is their position in a lease. While the lessor is the one that holds the rights to a property/asset, the lessee borrows the right of use of the property/asset for a certain period of time.
Tabulated below are other significant points of difference between a lessor and a lessee.
Summing up, a lessor is the owner of the asset, whereas a lessee is a person who gets possession of an asset for temporary use.
By denominating these terms for the owner and the renter, lease management becomes simpler. The owners and renters become clearly discernible in the lease agreement.
On that note, employing lease management software at your enterprise would save you from having to juggle these terms on a daily basis. The software can be automated to manage every lease your organization has and monitor the lessor and lessee’s compliance.
Lease management does involve understanding all the legal terms that are used in this ecosystem. However, it doesn't have to be difficult. With the information in this blog, the difference between lessor vs. lessee is clear, among other things.
Using the advanced technology of no-code software development has propelled organizations one step further in developing custom lease management solutions. Platforms like LeasO provide robust no-code software that brings lease accounting, Lease administration and Lease management all under one easy to use interface.
For more information on no-code software, you can get in touch with us.