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What is a Lessee?

What is a Lessee?


A lessee is one of two parties in a lease agreement. Also known as the tenant or renter, the lessee pays to use the property of the other party, the lessor.

A lessee is one of two parties in a lease agreement

A lease agreement is a contract that’s used when one person or business pays to use the property of another. These agreements have two parties: a lessor and a lessee. The lessor owns the property, while the lessee is the party that pays for the right to use it. Lease agreements are often used for office space, vehicles, and other physical property. The contractual agreement gives the lessee the right to use the property or asset as long as they stay within the terms of the lease.

Like other contractual agreements, leases have certain terms that each party must follow. The terms of the contract generally depend on the type of property you’re leasing. The state in which you live could also impact the lease terms since some states guarantee certain rights to the parties of some lease contracts, including vehicle and apartment leases.

A commercial lessee may expect the lease to grant the right to paint interior walls and install signs and equipment used in the business, while a residential lessee may expect the lease to include a right to privacy, compliance with local building codes, and habitable shelter. 


Suppose you work for a local government that’s looking for an office space for a new department and, rather than buying, you find one on the market to rent. The government agency (the lessee) signs a contract with the building’s owner (the lessor). The lease agreement gives the agency the right to to use the office space for one year, as long as it makes its monthly rent payments and abides by all other stipulations of the lease.

What’s important here?

If either party ignores the terms of the contract, the other party could potentially break the agreement early. For example, if you’re the lessee and don’t pay your rent on time, the lessor could evict you from the property.