Definition of rental agreement
A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. A rental agreement is a lease in which the asset is tangible property.
There is typically an implied, explicit, or written rental agreement or contract involved to specify the terms of the rental, which are regulated and managed under contract law. Examples include:
- Renting real estate (real property) for the purpose of housing tenure (where the lessee rents a residence to live in), parking space for a vehicle(s), storage space, whole or portions of properties for business, agricultural, institutional, or government use, or other reasons.
- When renting real estate, the person(s) or party who lives in or occupies the real estate is often called a tenant, paying rent to the owner of the property, the lessor, often called a landlord (or landlady). The real estate rented may be all or part of almost any real estate, such as an apartment, house, building, business office(s) or suite, land, farm, or merely an inside or outside space to park a vehicle, or store things all under Real estate law.
- The rental agreement for real estate is often called a lease, and usually involves specific property rights in real property, as opposed to chattels.
- In India, the rental income on property is taxed under the head "income from house property". A deduction of 30 % is allowed from total rent which is charged to tax.
The time use of a chattel or other so called "personal property" is covered under general contract law, but the term lease also nowadays extends to long term rental contracts of more expensive non-Real properties such as automobiles, boats, planes, office equipment and so forth. The distinction in that case is long term versus short term rentals. Some non-real properties commonly available for rent or lease are:
- motion pictures on VHS or DVD, of audio CDs, of computer programs on CD-ROM.
- transport equipment, such as an automobile or a bicycle.
- ships and boats, in which case rental is known as chartering, and the rent is known as hire or freight (depending on the type of charter)
- aircraft, in which case rental is known as chartering, or leasing if the rental is longer term
- specialized tools, such as a chainsaw, laptop, IT equipment or something more substantial, such as a forklift.
- Large equipment such as cranes, oil rigs and submarines.
- a deckchair or beach chair and umbrella.
- Designer handbags, jewelry, sunglasses and watches.
In various degrees, renting can involve buying services for various amounts of time, such as staying in a hotel, using a computer in an Internet cafe, or riding in a taxicab (some forms of English use the term "hiring" for this activity).
As seen from the examples, some rented goods are used on the spot, but usually they are taken along; to help guarantee that they are brought back, one or more of the following applies:
- one shows an identity document
- one signs a contract; any damage already present when renting may be noted down to avoid that the renter is blamed for it when the good is returned
- one pays a damage deposit (a refundable fee that may be used in part to pay for damage caused by the renter)
- if the customer has a credit account with the rental company, they may rent over several months (or years) and will receive a recurring or continuation invoice each rental period until they return the equipment. In this case deposits are rarely required.
- In certain types of rental (sometimes known as operated or wet rental) the charge may be calculated by the rental charge + timesheets of operators or drivers supplied by the rental company to operate the equipment. This is particularly relevant for crane rental companies.
Sometimes the risk that the good is kept is reduced by it being a special model or having signs on it that cannot easily be removed, making it obvious that it is owned by the rental company; this is especially effective for goods used in public places, but even when used at home it may help due to social control.
Persons and businesses that regularly rent goods from a particular company generally have an account with that company, which reduces the administrative procedure (transaction costs) on each occasion.
Signing out books from a library could be considered renting when there is a fee per book. However the term lending is more common.
Source: Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.