Lease

A lease is a contract between a lessor (owner) and a lessee (tenant) that grants the tenant the right to possession and use of real property for a specified period of time in exchange for rent.

• Competent parties
• Mutual consent
• Lawful objective
• Consideration (rent)
• Description of the premises
• Term of the lease

• Transfers possession, not ownership
• Creates a leasehold estate
• May be written or oral (longer terms generally must be written)
• Rent may be paid in money, services, or a share of profits

• Gross Lease
  • Tenant pays rent; landlord pays expenses (taxes, insurance, maintenance)

• Net Lease
  • Tenant pays rent plus some or all expenses
  • Types: single-net, double-net, triple-net (NNN)

• Percentage Lease
  • Rent based on a percentage of tenant’s gross sales
  • Common in retail

• Ground Lease
  • Tenant leases land and usually builds improvements
  • Improvements typically revert to owner at lease end

• Lease → fixed term, terms cannot change without agreement
• Rental Agreement → periodic, terms can change with proper notice

• A lease creates exclusive possession for the tenant
• A lease is a contract, not a conveyance of title