Leasing

Leasing involves temporary grants of the right to possess, use, and occupy real estate or PERSONAL PROPERTY in exchange for rent or other payments. Leasing is a widespread business and consumer practice. Apartments, automobiles, trucks, equipment, facilities, mining claims, and many other forms of property are leased. To businesses and consumers, leasing offers the benefit of reduced initial expenditure. Many manufacturers provide leasing as an option for their customers. As the cost of durable goods, particularly automobiles, has risen, many U.S. consumers now lease cars. Changes in U.S. tax laws, no longer allowing deduction of interest expenses from personal income taxes for consumer purchases other than home-MORTGAGE interest deduction, has helped stimulate consumer leasing activity. Leases can be long- or short-term, but never more than the owner’s rights extend. The owner is called the “lessor”; the temporary user, the “lessee.” Financed leases, a type of secured transaction, are governed by Article 2A of the UNIFORM COMMERCIAL CODE. The sale of property with the understanding that the seller will lease it back, known as a “leaseback” transaction, is often driven by tax considerations. A tenant’s temporary interest in realty is called a “leasehold,” and in the practice of “subleasing,” the holder of lease rights transfers them to a third party, the “sublessee.” This can only be done with permission of the lessor.