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Simple English definitions for legal terms
tripartite lease
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A quick definition of tripartite lease:
A lease is a contract where someone who owns property lets someone else use it in exchange for money. The person using the property is called the lessee and they pay rent to the owner, who is called the lessor. There are different types of leases, like a commercial lease for businesses or a month-to-month lease with no written contract. A tripartite lease, also known as a finance lease, is a type of lease used by businesses to finance expensive equipment.A more thorough explanation:
A tripartite lease is a type of finance lease used by businesses to finance capital equipment. It involves three parties: the lessor (who finances the asset), the lessee (who uses the asset), and the supplier (who manufactures or supplies the asset). The lessee pays maintenance costs and taxes and has the option to purchase the asset at the end of the lease for a nominal price.
For example, a construction company may enter into a tripartite lease to finance the purchase of heavy machinery. The lessor (a financial institution) provides the funds to purchase the machinery, the lessee (the construction company) uses the machinery for their projects, and the supplier (the manufacturer of the machinery) provides any necessary maintenance or repairs.