There are three separate levels of rights or interests affecting both forms of property. In descending order of importance they are:
• ownership,
• possession or
• control and use.
The legal documents that transfer these rights are respectively: conveyance/transfer, lease/tenancy, and bailment/pledge for tangible personalty, assignments and licenses for intangibles.
Concept of Leasing:-
Under normal circumstances, owners are free to do what they want with their property. In the case of personalty, the normal rule is that owners in possession cannot steal their own property, nor can they be prosecuted if they destroy it. Owners can, however, steal their property from another if they have already surrendered possession to that person.
This reflects the power of the state to regulate the rights and duties of an owner and to impose liabilities should others suffer loss or be endangered by any use to which the property is put. But, in general terms, owners have considerable freedom of action under all legal systems, both national and international. By definition, owners also have the rights of both possession and control over their property, and they can transfer those subordinate rights to others.
Advantages of commercial leasing
For businesses, leasing property may have significant financial benefits:
• Capital assets may fluctuate in value. Leasing shifts risks to the lessor, but if the property market has shown steady growth over time, a business that depends on leased property is sacrificing capital gains.
• Because of investments which are done with leasing, new businesses are formed. Furthermore, unemployment in that country is decreased.
• Leasing may provide more flexibility to a business which expects to grow or move in the relatively short term, because a lessee is not usually obliged to renew a lease at the end of its term.
• In some cases a lease may be the only practical option; such as for a small business that wishes to locate in a large office building within tight locational parameters.
Disadvantages of commercial leasing
For businesses, leasing property may have significant drawbacks:
• A net lease may shift some or all of the maintenance costs onto the tenant.
• If the business is successful, lessons may demand higher rental payments when leases come up for renewal. If the value of the business is tied to the use of that particular property, the lessor has a significant advantage over the lessee in negotiations.
You should buy the lease obligations in order to terminate any capital leases off the company's balance sheet.
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