Equipment Lease Agreement

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Updated February 06, 2023

An equipment lease agreement is between a lessor, the owner of the equipment, and a lessee who agrees to pay rent for the equipment to use for a specified time period. An equipment lease can be structured with a start and end date or on a month-to-month basis. Depending on the agreement, the lessee may be able to make modifications or adjustments to the equipment as long as it does not affect its value.

Table of Contents

Types of Equipment (11) Equipment Rental Tax Laws Sample – Equipment Lease What to Include (10) How to Write an Equipment Lease Video

Types of Equipment (11)

• Appliances;
• Electronics;
• Event/Party furniture;
• DJ equipment;
• Furniture;
• Gym equipment;
• Heavy machinery;
• Medical equipment;
• Power tools;
• Vehicles; and
• Any other personal property.

Equipment Rental Tax Laws

*Subject to additional state and local sales tax rates.

Sample

Download: Adobe PDF, MS Word, OpenDocument

What to Include (10)

• Lessor’s (owner) name;
• Lessee’s (renter’s) name;
• Description of equipment;
• Lease term;
• Rent amount ($);
• Security deposit;
• Late charges;
• Delivery responsibility;
• Repairs and maintenance; and
• Insurance requirements (if any).

How to Write

Download: Adobe PDF, MS Word, OpenDocument

Equipment Rental Agreement

I. The Parties

(1) Rental Agreement Date. The formal date that should be associated with this agreement in the future must be established in the first article.

(2) Equipment Lessor. The Party (or Business Entity) with the legal right to rent out the equipment must be identified by name and must have his or her business mailing address documented. In most cases, this will be the Owner of the equipment being leased.

(3) Lessee. The Client who will live up to the obligations of this agreement in exchange for the use and (temporary) possession of the leased equipment is a necessary report for this document’s introduction. Make sure to attach the Lessee’s official billing or mailing address to his or her identity as well.

II. Equipment Description

(4) Equipment Being Leased. The equipment at the center of this agreement will need to be well-defined. In many cases, a product name and serial number will suffice however some types of equipment such as trailers or mechanized farm equipment may have additional information such as the color, make, and model. In addition to this basic description, any identifying alterations, improvements, or marks that can be used to define the equipment being leased should be included.

III. Lease Type

Select Only Item (5) or Item (6)

(5) Fixed Lease. The period of time when the Lessee shall have possession of the leased equipment should be established in this agreement before the equipment is released. The first option will seek a predetermined start date and termination (or ending) date for the time when the Lessee shall have possession of the concerned equipment. This fixed-term for the lease will need some additional definition by selecting one of two supporting statements to indicate the results of the lease termination. Present this result by selecting the first option if the Lessee may continue to have possession of the leased equipment under the same terms of this lease on a monthly basis or the second option if the Lessee must return the equipment to the Lessor upon the termination date of the fixed term. It should be mentioned that a fixed term may be for any length of time that is appropriate (for instance, one day, one week, six months, etc.).

(6) Month-To-Month Lease. The term or period of the equipment rental can be set on a monthly basis. Generally, rental terms expected to terminate within a year of the start date will be on a month-to-month basis however, some may continue for a much longer time. If this lease type is selected it must be assigned a start date when the Lessee will first take possession of the equipment and have a predetermined number of days’ notice of termination established. Such a lease can be terminated at any time so long as the number of day’s notice before termination is given from the Terminating Party. Either the Lessor or the Lessee may terminate the equipment rental under these circumstances while this lease is in effect.

IV. Rent

(7) Payment Amount. The payment the Equipment Lessor expects from the Lessee on each due date must be defined as a dollar amount.

(8) Payment Frequency. Indicate how often the equipment rent amount must be paid by selecting the most appropriate checkbox item from the list provided. In this way, a one-time payment of the above amount can be called for or a payment every month, week, or day can be required of the Lessee. If the Lessor seeks a different period defining when payment is due (i.e. bi-weekly or once every two weeks), then the final option should be selected since this will allow such a free-form definition to be recorded.

V. Rent Instructions

(9) Approved Payment Method. The manner in which the Equipment Lessor wishes to be paid should be recorded in this agreement. Commonly, equipment rentals can be paid for using credit, money transfers, checks, or even cash. This is largely up to the Equipment Lessor and his or her Client (the Lessee) but must be documented before this paperwork is signed so that it can be applied to the agreement being developed.

VI. Late Charges

(10) Penalty For Late Payments. Many Lessors will seek to impose a penalty amount when the Lessee does not pay the equipment rental amount on time. If this will be the case, then the number of days after a missed payment’s due date should be set as a grace period made given to the Lessee. It will be expected that the first day the penalty is added to the Equipment Lessee’s account will be the final day of the grace period. Additionally, a record of the exact penalty amount should be solidified in the statement being made. Once done, this statement shall declare that upon a certain number of days after the missed payment date, the penalty amount will be added to the Lessee’s bill.

(11) Applying Late Payment Penalty. The way in which the penalty is added should also be discussed. Select the appropriate checkbox to indicate when the penalty will be added and how often. In this way, a one-time penalty amount can be applied when the Equipment Lessee does not pay within the grace period defined above, can be charged for every one day past the due date that the equipment rental amount is unpaid, or charged in some other way. If the “Other” checkbox is selected, you must supply the space provided with the frequency of the penalty adjustment to the Lessee’s bill.

VII Non-Sufficient Funds

(12) Returned Checks. If the Lessor has indicated that a check can be submitted for payment then, it would be wise to account for a possibility of a check being returned for insufficient funds. This can result in additional banking charges and many Equipment Lessors will require that the Lessee honor the obligation of paying such charges. A penalty charge for each check (even online) that is returned for lack of funds should be documented in the seventh article as a precaution to protect the Lessor.

VIII. Security Deposit

(13) Security Requirement Status. Lessors of equipment will be interested in safeguarding the quality of the leased equipment. To this end, a deposit amount can be collected from the Lessee and held to cover any damages or default that fall under the responsibility of the Lessee. If this is the case, then select the appropriate checkbox statement and record the exact equipment security deposit amount the Lessee must release to the Lessor to enter this lease. However, if an equipment security deposit is not required, this will be equally as important to establish. Select the statement that best defines the security deposit requirements the Lessor places for this agreement.

IX. Delivery Of Equipment

(14) Transportation Obligation. Sometimes, the equipment being leased may be costly or time-consuming to transport from its current location to one where the Lessee requires. This agreement can be set to place the responsibility of transporting the equipment to and from the Lessee on the Lessor, on the Lessee, or both (“Shared”).

X. Option To Purchase

(15) Purchase Opportunity. Indicate if the option to buy the equipment will be available to the Lessee or if this option will not be applied by selecting one of the statements in the tenth article. Keep in mind, that if the option to buy the equipment from the Lessor will be given to the Lessee, then the dollar amount that will be required for purchase (i.e. the equipment’s selling price) should be entered where requested.

XI. Repairs And Maintenance

(16) Standard Repair Obligation. In general, most pieces of equipment will require some standard maintenance and even repairs. The Party responsible for the payment of normal maintenance costs should be defined by selecting the “Lessor,” “Lessee,” or “Shared” checkbox. It should be noted that a standard repair is the result of wear and tear such as tune-up for a motorized lawnmower does not include Lessee-caused damages such as bending the axle on a motorized lawnmower by accident or by because the Lessee operated the equipment in a reckless manner.

XII. Insurance Requirement

Select And Complete Either Item 17 Or Item 19

(17) Insurance Coverage Status. Some equipment can cause damages to property or people that will result in liability payments that must be paid by either the Operator (Lessee)  or the Owner (Lessor). Thus, select the first checkbox if the Lessee must carry insurance. Then continue to indicate the type of insurance the Lessee should have. By selecting one (or more) of the follow-up statements the Lessee can be given the responsibility to maintain a Disability Insurance Policy on the equipment to cover a liability policy in the amount you define, “Casualty Insurance” for a minimum coverage amount that is recorded directly in the statement placing this requirement, and/or can be required to carry the type of insurance policy that is documented after the word “Other” for the minimum amount you define.

(18) Waiving Lessee Insurance Requirement. Select the “Not” statement in the twelfth article if the Lessee will not be obligated to carry any kind of insurance policy on the equipment being leased.

XXI. Governing Law

(19) State Jurisdiction. The state where the equipment is owned is often the jurisdiction that will control the contents of this document and determine its legal status should be documented.

XXIII Additional Terms & Conditions

(20) Required Provisions. There may be additional agreements made between the Lessor and Lessee that both wish included and covered by this contract. Any such amenity, obligation, or term that should be part of this contract but left unmentioned should be documented directly to its content to be applied. A distinct area in Article XXIII has been set aside where all such additions to this agreement can be documented.

XXIV. Execution

(21) Lessor’s Signature. This agreement will only be effective when the Equipment Lessor and Lessee sign it. The first signature area provided is reserved for the Equipment Lessor. He or she should provide a binding signature (of his or her own name) as the Lessor where requested. If this is a Busines Entity, then an elected Representative of this Entity may sign this agreement on the Entity’s behalf.

(22) Lessor’s Signature Date. The calendar date when the Equipment Lessor signed his or her name should be produced.

(23) Printed Name Of Lessor.

(24) Lessee’s Signature. If the Lessee has reviewed the completed agreement and intends to enter it, then he or she must sign this document and satisfy the remainder of the signature area provided with the requested presentations.

(25) Signature Date Of Lessee.

(26) Lessee’s Printed Name.

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