| Equipment leasing helps thousands of U.S. | | | | the lessee such a release.o Hell-or-High-Water |
| companies to grow and boost their profits each | | | | lease. The vast majority of equipment leases |
| year. Savvy business owners who benefit from | | | | require the lessee to perform its obligations under |
| leasing are aware of these top ten lease contract | | | | the lease without any right to off-set, hold back, |
| points:o Binding Agreement. Equipment leases are | | | | counter-claim, or otherwise withhold payments |
| legally binding contracts. Usually the leasing | | | | due under the lease. If the lessee has a legitimate |
| company will have very few obligations to fulfill. In | | | | claim against the leasing company, it would have |
| contrast, your company will have several | | | | to pursue that claim separately in court or |
| significant obligations, including proper equipment | | | | arbitration, as provided for in the lease.o Payment |
| maintenance, insurance, payment of rents, and | | | | Defaults. Most leases require that the lessee |
| others. Read the contract carefully and/or go | | | | make lease payments on specified dates. While |
| over it with your attorney.o Interim Rent. This | | | | most leasing companies will allow some leeway in |
| partial rent is due for the period between | | | | paying late and they are reluctant to issue default |
| acceptance of the equipment by your firm and | | | | notices, defaults can trigger severe consequences. |
| the lease start date. Many leases provide for a | | | | A payment default can initiate expensive legal |
| daily rent amount that is equal to the monthly | | | | proceedings and ultimately lead to repossession of |
| amount divided by thirty. Beware that your firm | | | | the equipment. Avoid these hassles by making |
| will pay significant interim rent if equipment | | | | your company's lease payments on time.o Return |
| acceptance takes place early in the month and | | | | of Equipment. Leases typically stipulate that the |
| the lease starts the first day of the following | | | | lessee must return the equipment in good |
| month. To reduce this expense, you should | | | | condition, if the lessee does not purchase it at |
| negotiate the interim rent clause or schedule your | | | | lease end. Leasing companies usually allow normal |
| equipment delivery and acceptance toward the | | | | equipment wear and tear. Leasing companies can |
| end of the month.o Triple Net Lease. Most leases | | | | and often will charge for damaged or missing |
| are triple-net contracts. This means that the | | | | equipment, and missing parts.o End-of-Lease |
| lessee is responsible for all insurance, maintenance, | | | | options. Many leases allow the lessee to purchase |
| and taxes related to ownership or possession of | | | | the equipment for a bargain amount at lease end. |
| the equipment. Taxes usually include property | | | | Some leases do not. Rather, these leases may |
| taxes and sales/use taxes. Insurance typically | | | | offer a variety of options, including: the right to |
| includes casualty and liability insurance in favor of | | | | purchase the equipment at fair market value; the |
| the leasing company. Maintenance clauses usually | | | | right to return the equipment; the right to renew |
| require the lessee to maintain the equipment in | | | | the lease for a specified period; the right to |
| good working order or up to a specified | | | | continue the lease on a month-to-month basis; the |
| standard.o Personal Guarantees. Some leases | | | | right to purchase the equipment at a stated price; |
| require personal guarantees of the lessee's | | | | and/or various other options. Make sure you read |
| principals. Under most guarantees, the guarantors | | | | the lease carefully and that the lease has the |
| stand behind the lessee's performance and | | | | desired end-of-lease options.o Choice of Law. |
| obligations under the lease. In many cases, the | | | | Typically, a leasing company will choose its state |
| guarantee gives the leasing company the right to | | | | and/or county as the legal venue under which |
| bypass the courts and demand guarantor | | | | lease disputes get resolved. Therefore, a court or |
| performance upon certain uncured contract | | | | arbitrator in one of these jurisdictions will likely |
| defaults.o Assignable Contract. Most leases give | | | | settle any contract disputes. If the location is a |
| the leasing company the right to sell and/or assign | | | | state other than where your company resides |
| the contract to another party at will. This clause is | | | | and a dispute arises, your company may have to |
| important because the leasing company may be | | | | hire legal counsel licensed to practice in that state. |
| required by its funding source to assign (or | | | | When a leasing company presents you with a |
| sometimes sell) the lease to receive financing. | | | | contract to sign, keep these top ten lease |
| Some leases allow the lessee to assign its rights | | | | considerations in mind. While they highlight only a |
| and responsibilities under the lease. This | | | | few lease considerations, they are among the |
| assignment usually does not relieve the lessee of | | | | most important. |
| its obligations, unless the leasing company grants | | | | |