A lease assumption allows a consumer to take over a lease from another lessee who is no longer able to satisfy the conditions of a contract. Assumed leases are common for rental properties and vehicle contracts. Lease assumption brings several advantages to a consumer, such as money savings and a shorter leasing contract.
Low Upfront Costs
A lease usually requires upfront costs, such as a down payment for a vehicle or a security deposit for a property, that may be as much as several thousand dollars. When a consumer assumes a lease, the original lessee has already paid all the required fees and deposits. A new lessee saves this money, as many of the fees are assessed with the initial lease contract and do not apply, when another individual takes over a lease.
Incentives
Lessees may offer incentives to consumers who take over their leases. They may offer a cash payment upon a successful completion of a lease transfer. Such incentives are common for car lease transfers. When transferring a property lease, a new lessee may get to keep a security deposit as long as he follows the contract obligations and leaves the property in a proper condition at the end of the lease term. If a property lease is paid ahead, a new lessee may occupy the property for free in exchange for maintaining the property and paying the utilities.
Advantages
Along with financial incentives, a consumer has other advantages of assuming a lease. Consumers may lease a vehicle to see if they like it before purchasing it. A new lessee gets to enjoy a newer vehicle and a lower monthly payment, as leases usually offer lower payments than loans. He also may have an option to buy the vehicle at the end of the lease term. A consumer may take over a short-term property lease to see if he likes the property and the area or if he needs a temporary housing arrangements.
Considerations
Lease assumptions may become costly for a new lessee if he does not follow the lease contract. Vehicle leases often have mileage limits and other restrictions. A consumer may have to pay substantial end-of-lease charges if he does not follow the conditions of the lease contract. A property landlord may charge penalties if a lessee does not follow the conditions of a lease contract. A new lessee should read the contract carefully and try to negotiate more favorable terms before signing it.
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