When talking about a lease agreement, people commonly use the terms “landlord” and “tenant” or “renter” when describing each party. In legal documents, however, there is often reference to a “lessor” and a “lessee.” It can be somewhat confusing to understand which party is the lessor and which is the lessee.
A Lessor Is a Landlord
The party who leases a property to another person or a business entity is the lessor in a lease agreement and may also be referred to as a landlord. The person who rents the property from a landlord is the lessee and may also be referred to as a tenant.
This terminology is the opposite of the language used in mortgage agreements. The mortgagee is the financial institution that grants a mortgage to a homeowner, and the mortgagor is the homeowner who takes out the mortgage.
Part of the reason for the confusion about the terms is based on the categorization of leasing. Traditionally, people may think of the person leasing a property as the tenant. Nevertheless, it may also be said that the landlord is leasing a property to a tenant.
Leases outline each parties’ respective responsibilities to one another. Understanding that the landlord is the lessor and the tenant is the lessee is important for correctly interpreting parties’ rights and obligations.