Transferring Property Interest through a Lease

Sam

A lease or tenancy refers to an interest in the personal property or real property given by a lessor to another person, the lessee for a fixed period of time. The lessee can possess the property exclusively and in return pays the lessor a fixed amount on a monthly basis.

Depending upon the time period of validity, there are different kinds of lease.

The lease can cover a specified time period after which it terminates.
It can be conditional, that is, it will continue until any specified event occurs, such as the death of an individual.
The lease can be at will, that is, it can be extended till the parties wish to. Either party can terminate it without penalty.

In a lease, the lessor has better rights to enforce all terms and conditions in the contract since he retains the ownership of the property. On the other hand, the lessee cannot create a sublease or cannot transfer the control to a third party.

It is always better to lease than to buy in those countries where acquiring title is complicated with the state imposes high taxes on owners, transaction costs are high and it's difficult to obtain finance. But if credit is available at low interest rates with minimal tax disadvantages and low transaction costs, then it's preferable to go for land ownership.

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