Lessee is a contractual term you should know. Bankrate explains the meaning.

What is a lessee?

A lessee, also known as a tenant, is a person who rents land or personal property from the owner, or lessor.

Deeper definition

In a lease agreement, the lessee is the person or business entity that leases or rents property from another person or business entity. A lease is a contract between a lessor and lessee, and this document specifies the stipulations of the agreement in full. If an individual is contracting to rent a property, he is the lessee, while his landlord is the lessor. In return for the privilege of using the property for a set period of time, the lessee has to pay the lessor regularly in accordance with the terms specified in the lease agreement.

When a property owner rents a house or an apartment, the rented property must be suitable to live in. This means that the rented property must be “habitable.” While the property is being rented, the property owner must do maintenance work and make repairs to keep the property habitable. A lessor, however, is not liable for repairing damage caused by the lessee, or the lessee’s family, guests or pets.

Lessee example

Maria owns a restaurant business and wants to open a second restaurant close to the shopping mall, but she cannot afford to buy or build a new location. Maria finds out that Bob’s Rental Co. owns a building near the mall and is looking for renters. Maria decides to lease the building and signs a lease agreement with Bob’s Rental Co.

Maria is the lessee and Bob’s Rental Co. is the lessor. By signing the lease contract, the rental company gives the rights of ownership, or in this case occupancy, and use to Maria. In return, Maria pays the rental fee to Bob’s Rental Co. each month. This is a standard lease agreement similar to renting an apartment.

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