What is the Difference Between Lessor and Lessee?

In a lease agreement, there are two main parties involved: the lessor and the lessee. The key differences between them are as follows:

• Lessor:
• The lessor is the person or entity that owns the asset and leases it to the lessee.
• The lessor grants the lessee the exclusive right to use and occupy the asset for a specified period.
• The lessor is responsible for maintaining the asset, conducting regular maintenance, and ensuring it is in good condition.
• In exchange for the asset's use, the lessor receives periodic interest payments from the lessee.
• Lessee:
• The lessee is the person or entity that borrows the asset and promises to pay interest to the lessor.
• The lessee has the right to use the asset for a specified period but does not own the asset.
• At the end of the lease term, the lessee must return the asset to the lessor or face potential legal ramifications.

In a lease agreement, both parties enter into a legally binding contract that outlines the terms of their arrangement, including payment terms and maintenance responsibilities. The lease agreement can involve various types of assets, such as real estate properties, equipment, and machinery.

Comparative Table: Lessor vs Lessee

Here is a table summarizing the differences between a lessor and a lessee:

In a lease agreement, both the lessor and lessee have specific roles and responsibilities. The lessor provides the asset or property for the lessee to use, while the lessee pays the lessor for the right to use the asset or property.