Leased real property: Overview, definition, and example
What is leased real property?
Leased real property refers to land or buildings that are rented or leased to a tenant by a property owner (the lessor) for a specified period of time in exchange for rent or other compensation. The lease agreement typically outlines the rights and responsibilities of both the landlord and the tenant, including the rental amount, lease term, and conditions for the use of the property.
For example, an office building that a business rents for its operations is considered leased real property.
Why is leased real property important?
Leased real property is important because it allows businesses and individuals to use real estate without the need for ownership, which can be financially burdensome. Leasing provides flexibility for tenants, enabling them to secure space for their needs while avoiding the long-term commitment of owning property. For property owners, leasing real estate can generate a steady income stream while maintaining ownership.
Leasing agreements are vital for both parties, as they set out the terms of occupancy, protecting both the tenant's right to use the property and the landlord's right to receive rental income.
Understanding leased real property through an example
Imagine a small business that operates from a commercial space rented from a property owner. The business signs a lease agreement for five years, agreeing to pay $2,000 per month for the use of the property. The property owner (landlord) remains the owner of the building, while the business (tenant) is granted the right to use the space for the duration of the lease.
In another example, an individual rents an apartment from a landlord. The lease agreement specifies that the tenant will pay rent for the next 12 months and outlines their rights, such as the ability to renew the lease or terminate it early under specific conditions.
Example of a leased real property clause
Here’s how a leased real property clause might appear in a contract:
"The Lessor hereby agrees to lease the Property located at [address] to the Lessee for a term of [specified time period] commencing on [start date]. The Lessee agrees to pay rent in the amount of [rental amount] per month, with all payments due on the [specified day of the month]. The Lessee shall have the right to use the Property for [specified purposes], subject to the terms and conditions outlined in this Agreement."
Conclusion
Leased real property allows tenants to access land or buildings for their use while providing property owners with a reliable source of income. Clear lease agreements are essential to ensure that both parties understand their rights and obligations, protecting the interests of both the landlord and tenant.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.