What is the Meaning of Lessor & Lessee?

When you rent or rent out real or personal property, you will typically see these similar two words on the contract: lessor and lessee. If you’re not up on your legal jargon, these words may cause a bit of confusion.

The lessor is the person or entity that owns rental property and leases it to someone else.

Each state differs somewhat when it comes to lease laws, so it's important to understand the meaning of any clauses in the lease documents before signing them.

For example, you could have a stipulation in the lease that the lessee will make repairs to the property in exchange for reduction of the rent owed. If you're leasing the property from someone else and you don't make the repairs, you'll miss out on the lease reduction, and you might also be in default of the lease.

Simply speaking, tenants' rights are what the lessee is legally entitled to from the lessor. These rights do vary from state to state, but universally recognized rights include having a habitable home and adequate access to water, heat and electricity. If you think you have rented an inhabitable property, you should contact the renters’ rights advocate for your location.

Another universal tenant right is that your landlord cannot enter your home without providing prior notice, except in certain emergency circumstances. In addition, if you are in default of your payments, this right may be waived. The amount and type of notice that a lessor needs to give to a lessee before entering their unit also varies from state to state.

Sometimes a lessee needs to leave a rented property before the term of the lease is up. There are certain circumstances where the lessee can break a lease, such as if they are in the military and are being deployed. However, most people will need to either pay rent for the duration of the lease or find a sublessee to pay the rent in their stead. A sublessee will take over the responsibilities of the lessee, such as keeping the property clean and paying the rent.

It is always the lessee’s responsibility to find a subletter for their lease. Many leases dictate that subleasing is not permitted, however, so it's important to verify if you are permitted to sublet before proceeding.

While some lessors have a backlog of people waiting to get into a property, this should never be assumed to be the case. If a lessee cannot find someone to take over the lease, they will have to either pay to break the lease or pay out the duration of the lease as signed. Note that, even when subletting is permitted, landlords may retain the right to approve or deny the sublessee, so be sure to discuss your choice before permitting someone to move in to your unit.

You are allowed to evict occupants whether you are the lessee or the lessor. If you are the lessee, you can evict someone who is subletting the unit. If you are the lessor, you can evict either the sublessee or the lessee. The lessor can also evict an occupant or resident whether that person has a lease agreement or not.

Depending on your state, there will be legal steps that you must take before you evict an occupant. Regardless of whether you are a lessee or lessor, you should familiarize yourself with these steps before proceeding.

Generally, occupants, lessees, tenants or residents must be in default of their payments or in violation of one or more clauses of the lease agreement in order to be evicted. These reasons might include damage to the property, inappropriate or illegal behavior, having a pet that is not permitted or excessive noise violations. In some cases, the lease agreement may prohibit occupants who are not parties to the lease. If you rent property to someone and they have a roommate who isn't on the lease, and your lease agreement forbids this arrangement, you may have grounds to evict.

Read More: Difference Between Leaseholders & Occupants

Personal property, including vehicles, can also be leased. In this instance, a car dealership or auto manufacturing company would be the lessor, and you, as the person leasing the vehicle, would be the lessee. In most instances, auto leases are subject to strict rules, including mileage limits and duration. Typically, owners are expected to turn the vehicles back in to the dealer at the conclusion of the lease if they choose not to purchase the car. If the lessee does not maintain the car according to the lease agreement or exceeds the allotted mileage, they may be subject to fees.

Other items, including home appliances, musical instruments or construction equipment may also be leased. In these instances, the lessee is the person who will be leasing the items, and the lessor is the owner of those items. Typically, these arrangements involve stipulations for use and lay out fees that may be charged if the equipment is not properly maintained or returned.