lessor

A lessor is a person or organization that owns an asset and grants its use to another party, the lessee, under a lease agreement in exchange for periodic payments. The asset remains the property of the lessor, who retains title and control over disposition unless otherwise specified.

The lessor's primary rights include receiving rent on schedule, enforcing lease terms, and reclaiming the asset at the end of the term or upon default. Obligations commonly include providing the asset in working order at the start, maintaining clear title, and fulfilling any warranties specified in the contract. Insurance and responsibility for loss or damage during the lease period vary by contract; often the lessee bears routine maintenance costs, while the lessor covers capital improvements.

Leases can cover a range of assets, including real estate, vehicles, machinery, equipment, and software licenses. Leases are categorized in accounting and finance as financial (or capital) leases, where the lessee assumes most risks/rewards of ownership, or operating leases, where the asset remains on the lessor's balance sheet. Classification and treatment depend on applicable accounting standards (for example, IFRS and US GAAP).

In practice, the lessor and lessee negotiate terms such as lease duration, rent amount, renewal options, security deposits, maintenance responsibilities, and remedies for breach. The arrangement allows the lessee to use the asset without purchasing it, while providing the lessor with a revenue stream and asset recovery options.