# Lessee: The Person That Rents a Property

> **Definition**
>
> A lessee is a person who rents property from a lessor and is bound by the terms of a lease agreement, which outlines their rights and responsibilities regarding the use of the property.

## What Is a Lessee?

A lessee is a person who rents land or property from a [lessor](https://www.investopedia.com/terms/l/lessor.asp). The lessee is also known as the “tenant” and must uphold specific obligations as defined in the [lease](https://www.investopedia.com/terms/l/lease.asp) agreement and by law. The lease is a legally binding document, and if the lessee violates its terms they could be evicted.

### Key Takeaways

*   A lessee is a person who rents land or property, such as a vehicle. The person or entity the lessee rents from is the lessor. 
*   Most lessees must meet certain guidelines and restrictions when using the property, such as mileage limits on a leased vehicle. 
*   A lessee who is a tenant of a commercial or residential property may face different types of restrictions on their use of the space.
*   Both lessees and lessors have rights and responsibilities related to rental property.

## Understanding Lessees

Lessees who rent a property may be required to [follow certain restrictions and guidelines in the use of the property or real estate](https://www.investopedia.com/terms/h/habendum-clause.asp) they are paying to access and use. If the property is a vehicle under a lease, the lessee may need to keep their usage within certain mileage limits. The lessee could be subject to paying additional fees in the event that the mileage usage of the leased vehicle exceeds the agreed-upon limits.

Leased vehicles must also be maintained by the lessee with regular service and upkeep throughout the term of the agreement. These conditions must be met because the vehicle will be returned to the auto dealer at the end of the lease. The vehicle would then go on the market as a used car for sale. It is possible that a lessee [might want to seek full ownership of the vehicle](https://www.investopedia.com/articles/personal-finance/012915/car-leases-should-you-take-purchase-option.asp) at the end of the lease if such an [option](https://www.investopedia.com/terms/l/lease-option.asp) is made available.

> **Important**
>
> A lessor must provide a lessee with reasonable notice if they want to enter the leased property.

## Rights of Lessees

A lessee who is a tenant of a commercial or residential property may face different types of restrictions on their use of the space. A commercial lessee could be granted certain rights to remodel the property to better suit the business that will use the space. This can include repainting of walls, adding signage associated with the company’s brand, or installing equipment that will be used during the course of business. A commercial lease will also specify if the property must be returned to its original state when the tenancy ends.

Residential lessees may be limited in the choices for (or barred from) repainting the space they occupy as tenants. They might be allowed to add nonpermanent decorations to the property. The lessee’s rights include:

*   The right to privacy
*   The right to basic standards of habitability such as water, electricity, and heat
*   The right to live in a space that complies with local building codes

## Rights of Lessors

The lessor also has rights. These include:

*   The right to screen potential tenants
*   The right to know and approve of the occupant(s) of the leased unit
*   The right to use part or all of the tenant’s [security deposit](https://www.investopedia.com/terms/s/security-deposit.asp) to repair any damage caused to the property by the lessee

The lessor’s responsibilities include complying with health and safety codes, making necessary repairs, returning a fair amount of the tenant’s security deposit when the lease is terminated, and providing advance notice to the tenant if it will be necessary to enter the unit.

> **Article Sources**
>
> 1.  Legal Information Institute. "[Landlord](https://www.law.cornell.edu/wex/landlord)." Accessed Dec. 12, 2021.
>     
> 2.  Legal Information Institute. "[Landlord-Tenant Law](https://www.law.cornell.edu/wex/landlord-tenant_law)." Accessed Dec. 12, 2021.
>     
> 3.  Nolo. "[How to Screen and Select Tenants FAQ](https://www.nolo.com/legal-encyclopedia/how-screen-select-tenants-faq.html#answer-1739523)." Accessed Dec. 12, 2021.
>     
> 4.  Legal Information Institute. "[Eviction](https://www.law.cornell.edu/wex/eviction)." Accessed Dec. 12, 2021.
>     
> 5.  Legal Information Institute. "[Security Deposit](https://www.law.cornell.edu/wex/security_deposit)." Accessed Dec. 12, 2021.