A person who legally acquires the right to rent a property from a landlord is known as a lessee.
In rent agreements, one would invariably find the use of ‘lessee’ and ‘lessor’. This is especially true if the rent agreement pertains to commercial and industrial spaces. In this article, we explain the difference between a lessee and a lessor, and their respective rights concerning a lease.
Property leasing: The premise
Property renting is common in big cities, where a large number of people move for employment purposes. Since the immediate purchase of property may neither be feasible nor possible, most of them opt for rented accommodations. Here, leases come into the picture.
Property renting versus leasing
Leasing is a formal procedure that provides legal backing to one person utilizing another person’s property for a certain period. Since, in the West all types of renting – residential and commercial – are lease-based, the common terminology for renting a place is ‘leasing’. In India, however, ‘leasing’ denotes renting of commercial spaces, and ‘renting’ is used for residential properties.
However, these are not just two synonymous words defining the same things. From a legal perspective, leasing property is different from renting a property through a leave-and-license agreement. Lessee and lessor are the two main parties in a lease agreement.
To know the exact difference between the two, read our complete guide on lease versus rent.
Who is a lessee?
A legal term, ‘lessee’ is used to define a person who uses a building or an area of land on a lease. He is different from a tenant in the sense that a tenant pays rent for the use of a room, building, or land to the owner of the property. So, it is the lease that makes all the difference between a tenant and a lessee.
A lessee gets the right to use the property of the landlord in exchange for monthly rent and a security deposit. The rights and responsibilities of lessees are defined in state laws on rental property.
Who is a lessor?
The landlord of a property, who agrees to provide his property on rent through a lease, is known as the lessor. While he provides a lessee with the right to utilize his property, a lessor continues to enjoy complete ownership. Through the prior notice, he can ask the lessee(s) to leave the property. Again, the role and responsibilities of lessors are clearly stated in state rental laws.