Abstract:
Lease operations represent a step forward to enterprises willing to
procure machines and equipment and which do not have the necessary
financing sources or that intend to preserve their liquidities or their credit
limits.
The primary objective of the lease, as a financing instrument, is
represented by enterprises that intend to extend their business activity and to
improve their performance while its overall objective is to provide the
necessary support to technical progress. There are two principal types of
leasing, depending upon the party taking the risk of the value of the vehicle
(or other leased property) at lease end. In the U.S. this is called Closed-end
leasing. In other jurisdictions, it is called hire purchase, lease purchase or
finance leasing. These transactions are complicated. In those countries
where acquiring title is complicated, the state imposes high taxes on owners,
transaction costs are high, and finance is difficult to obtain, leasing will be
the norm. But, freely available credit at low interest rates with minimal tax
disadvantages and low transaction costs will encourage land ownership.
Whatever the system, most adult consumers have, at some point in their lives,
been party to a real estate lease which can be as short as a week, as long as
999 years, or perpetual (only a few states permit ownership to be alienated
indefinitely). For commercial property, whether there is a depreciation
allowance depends on the local state taxation system. If a lease is created for
a term of, say, ten years, the monthly or quarterly rent is a fixed cost during
the term. The term of years may have an asset value for balance sheet
purposes and, as the term expires, that value depreciates. Rental, tenancy,
and lease agreements are formal and informal contracts between an
identified landlord and tenant giving rights to both parties, e.g. the tenant's
right to occupy the accommodation for an agreed term and the landlord’s
right to receive an agreed rent. If one of these elements is missing, only a
tenancy at will or bare license comes into being. In some legal systems, this
has unfortunate consequences. When a formal tenancy is created, the law
usually implies obligations for the lessor, e.g. that the property meets certain
minimum standards of habitability.
