LEASING CONTRACT ATTORNEY
Many businesses elect to acquire an item via a leasing contract, rather than buy it outright, for a variety of reasons. A business may want to lease the item merely to evaluate it for possible future purchase considerations. Another reason might be that they may only need the item for a limited time period. And a third reason might be because the item is cost-prohibitive to the organization at the current time. Examples of leasing contracts that allow companies to grow and expand may include equipment, land, or office or factory space. Many businesses benefit from a lease-to-own arrangement, where they can get the equipment now and acquire the ownership over time.
A carefully drafted leasing contract will delineate the rights, responsibilities, duties and obligations of both parties. The most basic items should include the payment, time period covered, and how and when the lease may be terminated. A better leasing contract will also state whether or not the property may be sublet and who is responsible maintenance. Some leases require financial disclosures that must be provided periodically and specific conditions for any renewal term. Whether or not the leasing contract may be assigned is another example of items that should be addressed before finalizing any leasing agreement.
Know Your Terms
Often, the owner of the item being leased will have “standard” terms and conditions that they present to potential lessees. Most of the time, this type of lease is drafted to solely benefit one party, the drafter. But these initial terms are not always as ‘cast in stone’ as originally presented. Terms initially presented may or may not correctly state the law, hoping to contract around applicable statutes. Typically, state statutes are designed to benefit both parties, but people do try to tip that balance. Careful and considerate negotiation can often adjust these “standard” leases to benefit each party.
In addition, most people benefit from an explanation of the terms and conditions contained within a lease. The meaning behind, and responsibilities they carry, of each clause should be fully understood before signing. Certain clauses can carry additional costs and responsibilities that should be factored into the total cost of the lease. For example, most leasing contracts include a provision that the lessee is not responsible for normal wear and tear. However, that is different from destruction or complete failure of the item being leased. Your leasing contract should state who is responsible for the insurance coverage as well as the processes surrounding that coverage.
Certain machinery leases, like a copier or printer, should be accompanied by a Services Agreement from the lessor or manufacturer. If the lease does not have a services component, the lease should state what entities are authorized to service the machine. Without pre-authorized service providers, lessees can accidentally suffer financial penalties up to and/or including forced purchase.
Termination of Leasing Contract
Terms and conditions regarding the surrender of the asset at the end of the contract period should also be carefully documented, in advance. For example, who is to pay freight, insurance, details regarding preferred or exclusive carriers, documents to be signed at time of surrender, including any photographs or other documentation regarding the condition at time of surrender, as well as a host of other considerations, depending on the item, may need to be taken into account and detailed, in advance, in your leasing contract to protect both parties.To find out how an experienced leasing contract attorney from Larsen Law Offices, LLC can assist with the careful review, and draft the modifications necessary to your proposed lease, please contact Susan Larsen at (303) 520-6030.