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Simple English definitions for legal terms
derivative lease
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A quick definition of derivative lease:
A derivative lease, also known as a sublease, is when a tenant leases some or all of their rented property to another person for a shorter period of time than their own lease. The original tenant still holds the main lease and has the right to take back the property when the sublease ends. The person who receives the sublease is called a sublessee or subtenant, while the original tenant is called a sublessor or underlessor.
A more thorough explanation:
A derivative lease is also known as a sublease. It is a lease agreement where the original lessee (the person who leased the property) leases some or all of the property to a third party for a shorter term than their own lease. The original lessee retains a reversion in the lease, which means they still have some rights to the property.
For example, let's say John leases an apartment from a landlord for a year. After six months, John decides to move out of the apartment but still has six months left on his lease. Instead of breaking the lease, John finds someone else to lease the apartment for the remaining six months. This new person is the sublessee, and John is the sublessor.
Another example is if a business leases a large office space but only needs a portion of it. The business can sublease the unused portion to another company for a shorter term than their own lease.
These examples illustrate how a derivative lease works. The original lessee leases some or all of the property to a third party for a shorter term, allowing them to recoup some of their costs and avoid breaking the lease.