Lessee vs. Lessor – What’s the Difference?

In many parts of the country, property values are rising so quickly that even successful professionals are not financially able to invest in real estate. These conditions have led to a trend that sees a larger percentage of working adults and families renting, rather than owning.

Most of us have seen the terms lessor and lessee in rental agreements, but not everyone knows what they mean. Is lessor an alternate spelling of lesser? Is lessee a misspelling of lease?

The answer to both of these questions is no, but in this article, you will learn the actual meaning of both lessor and lessee.

What’s the Difference Between Lessee and Lessor?

In this article, I will compare lessee vs. lessor and use each of these terms in a few example sentences.

I will also outline a helpful memory tool that you can use to decide whether lessee or lessor better describes the party to whom you refer.

When to Use Lessee

lessee versus lessorWhat does lessee mean? In a financial contract, the lessee is the person to whom something is rented or loaned. If you are renting a car from a dealership, for instance, you are the lessee.

Here are a few more examples,

  • The lessee agrees to pay rent no later than the 1st of each month, or be subject to a late fee.
  • Well-qualified lessees may be eligible for 36-month financing and a 0.0% APR.
  • You can do this for a few months. Most auto manufacturers will allow another person to take over a car lease from the original lessee who wants out of theirs. –Chicago Tribune

Lessee can be considered a synonym of tenant or renter. It originated in Middle English, where it was adapted from the French verb lesser, which means to lease. Lessee is one of the rare cases where a word’s path from its origin to its current meaning is refreshingly clear.

When to Use Lessor

Definition of lessor definition and definition of lessee definitionWhat does lessor mean? A lessor is the party who rents property to another party. If we think of a lessee as a tenant or renter, the lessor is the landlord or owner.

Here are a few sentences that include lessor,

  • The lessor will be responsible for repairs and maintenance not related to damage directly caused by the lessee.
  • A rental agreement is only legally binding when it has a signature from both the lessee and the lessor.
  • Asia’s largest aircraft lessor is set to take off. Investors looking to hop on this rare pure-play air-leasing company should know where the emergency exit is. –The Wall Street Journal

Lessor comes from the same French verb as lessee. Its first known use in English was in the 14th century.

Today, lessee and lessor are common in legal documents, like rental agreements or vehicle lease terms, but are not widely used in everyday speech. English speakers would be more likely to use tenant or renter instead of lessee, and landlord or owner instead of lessor.

Trick to Remember the Difference

Define lessor and define lesseeRemembering lessor vs. lessee is simple: the lessor is the person who owns the property, and the lessee is the person renting the property.

Lessor and owner both contain the letter O, so it should not be much trouble to remember that a lessor is the owner of a property.

Summary

Is it lessee or lessor? Lessee and lessor are legal terms that are widely used on rental agreements and lease terms.

  • A lessee is the party who rents property from the lessor.
  • A lessor is the party who rents something out.

If you ever find yourself stuck choosing lessor or lessee in your next piece of writing, you can check back with this article for a refresher.