Leasing Buildings: Important Real Estate Term
Leasing is an agreement in which two parties are involved who negotiates a deal for some specific use of any equipments or assets i.e. buildings, cars etc. for certain period of time and for a fixed rate of amount. In this the party one who gives the possession of the equipment or an asset is called the lessor and the one who receives the possession is called the lessee. The agreement consists all the terms and conditions agreed upon by both the parties in which the rate of lease, period of lease etc is mentioned. Leases are classified into short term lease and long term lease. The lease which contains period of ten years or more than that is called as long term lease. The lease which contains period below ten years can be termed as short term lease. Leasing buildings may be for long term or short term period.
As soon as the agreement is complete the lessor may receive security deposits and advance rent for the possession of the building given to the lessee. Leasing buildings is called 100% financing. Leasing buildings has lots of advantages attached to it. It brings in the availability of capital for which can be used for many things. The capital thus received can be used for investments in properties, in shares and securities, in mutual funds for development of the business and for many other things. Once the period of agreement is over one may have to return the security deposit which was received during the initial stages of leasing buildings.
When the term of the lease is on the verge of ending or it has already expired the lessee can also renew the lease. As the real estate market is already booming landlords are playing an important role in helping the lessor in leasing buildings that is owned by him. Finding such kind of building is may require time and one can also consult the landlords. With the help of the landlords one can easily find these buildings. The landlord acts as a negotiator between the lessor and the lessee. In return to this if the deal is struck the landlord is subjected to get some percent of commission as decided by the parties.
In India places like Mac Donald, Pizza Hut, Dominoes, shopper’s stop etc. are working or operating their business from leasehold land or buildings.
With the recent development in the field of internet one can even find leasing buildings with the help of internet. There are lots of websites that makes it possible and simpler. There are also some disadvantages attached to this because the rent rates are subjected to market conditions. For example if you have given a building for lease at a fixed amount and the later the as per the market conditions there is rise in the rent amount the lessor cannot demand more money from the lessee because of the agreement.
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