This is the party who receives a certain amount of money to donate a property for a period of time. He or she is the owner. In this case, ownership is what makes the difference in the definition of lessor and lessee. A very good example o help understand how to define lessor and lessee is the owner of real estate property. Whoever wishes to stay in his or her house must pay a certain amount of money as rent to the landlord.

Lessor Examples:

  • The lessor can evict the lessee for failure to pay rent.
  • The lessor then purchases the asset and leases it to the lessee.
  • The lessor receives capital allowances against tax.


To rent an office, the right thing to do is to find out who the landlord/agent is, discuss with him or her, and reach some (legal) agreement before you can access the space and use it as agreed. In this case, you are the tenant and that’s one of the differences in the definition of lessee and lessor.

A lessee is a person who pays a fee in order to use a property for a certain period of time. He or she is expected to comply with all the conditions set by the lessor in legally binding documents. These documents establish the relationships that define lessee and lessor.

Lessee Examples:

  • The original lessee was not merely a guarantor or surety.
  • Lessee uses vehicles for illegal activities.
  • The lessee does not pay water charges, electricity charges, etc.

Key Difference Between Lessor and Lessee

Particular Lessor Lessee
Definition He the owner of the asset and the person who grants his assets to the lessee for lease; A lessee can also be termed as a borrower. He takes temporary possession of the property or the asset from the lessor.
Compensation In return of giving the asset to the lessee for lease, the compensation the lessor gets is the total amount of lease. They get the asset or property for temporary use and, in turn, pays the lease.
Status The legal owner of the asset; Just a borrower and does not enjoy any  legal owner status
Bankruptcy If the lessee gets bankrupt, then the lessor has the right to get the payments first. Has no relation to the bankruptcy of the lessor
Owner The real ownership remains with the lessor. Lessee is the temporary owner.
Asset Possession The lessor does not possess the asset. Lessee possesses the asset.
Legal  restrictions Since lessor is the owner of the asset, the number of restrictions is less. The obligations for the lessee are much higher. This is in case of damages or utilizing the asset as not mentioned in the contract.
Restriction Since lessor is the owner, there is no restriction on him for property usage. However, permission is required when the property is under-lessee. Lessee has restrictive control on the property or the asset.
Taxation As the owner of the asset, the lessor has to pay the taxes against the income and the property. Lessee is only using the asset temporarily and, therefore, does not have to pay the taxes.
Wear and tear of the assets As the owner, it is the responsibility of the lessor to take care of the assets and pay for the repair and maintenance. The lessee’s responsibility is limited to the time he is using the assets. The agreement also specifies regarding the repair and maintenance and the responsibility.
Other utility charges The clause for utility charges is also mentioned in the contract. However, generally, the lessor is not responsible for the payment of utility charges. Till the time the asset is with the lessee, he is responsible for paying for the utility charges.
Termination of contract Can terminate the contract in case any damage is done to his property by the lessee or in case the lessee breaks any clause of the contract. The lessee can also terminate the contract in case of an unknown event like a flood, fire.
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