Lessor is a common term you should be familiar with. Bankrate explains its meaning.

What is a lessor?

A lessor is a person who grants a lease. The lessor wants to retain ownership of a property, vehicle or other equipment, so he leases it out to another, using the rent income to help pay a mortgage or as a source of income, for example.

Deeper definition

A lessor owns the property or asset that he leases. If applicable, he is the titleholder. Lessors can lend anything from homes to commercial property or cars and construction equipment.

Any lease contract between two individuals designates the owner as the lessor and the tenant or renter as the lessee. These designations pertain to any type of property or asset included in the lease.

It is possible, in a third-party lease, for the lessor to not hold the title to the property but still be designated as the lessor, even though a third party is the titleholder. This is called a leveraged lease. Often, the third party is a financial institution that holds the title while the lessor makes payments, such as a mortgage.

Lessors are commonly known as landlords, in the context of property ownership and rentals. Landlords lease apartments or rental homes to tenants for a specified period, entering them into a lessor/lessee relationship.

Lessor example

When you rent an apartment or home, the person you rent from is your lessor. After you sign the lease, you become the lessee.

You want to ensure that you can trust your lessor to act in your best interest and take responsibility for the property. You do not own the property, and it is up to the lessor to maintain it to a reasonable and livable standard.

When your lease is over, you cease to be the lessee, but your lessor remains the lessor for the duration of his ownership of the property, and the period of time that he chooses to lease the property to any other party.

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