Difference Between Sale and Lease (With Table)

Sale and Lease are terms are used in the property field. Selling and Leasing are terms opposing to each other but are often thrown around without completely understanding the meaning of the terms in depth.

Sale vs Lease

The difference between sale and lease is that; Sale is when the owner of a property gives up the ownership in exchange for the money. Whereas Lease, on the other hand, is when the owner of a particular property gives out the property for a contract for a particular period. In this way, the owner doesn’t have to give up the ownership. 

Sale is a legal process of selling a property by passing over the ownership to the other party. This procedure of selling or transferring the ownership of the property over to the other party is done with the exchange of money and transfer of legal contracts. Once a piece of property is sold, the party becomes the owner, and the seller has no rights to the property.

Lease or Leasing a property is a legal process through which the owner of the property gives it out to the tenant for a particular period. The landlord and tenant sign a contract which is known as ‘the lease agreement,’ which gives the tenant the right to stay at the place. The difference between leasing a property and renting a property is the length of the agreement contract.

Comparison Table Between Sale and Lease

Parameters of ComparisonSaleLease
Possession Selling is shifting the ownership to the purchaser.Leasing holds the owner the same. The purchaser gets a lease from the owner briefly.
ExpenseSelling includes more expenses as compared to Leasing. Leasing includes fewer expenses as compared to Selling.
TimeSelling is permanent and cannot be turned back.Leasing is for a temporary period. The possession of the property is not given up.
OwnerThe ownership of the property is given up entirely.The ownership of the property stays with the same person.
CreditThe buyers can take credit to pay the owners for the property.The tenants cannot take credit to pay the rent to the landlords.

What is Sale?

Sale is a legal process of exchanging ownership. A seller trades any sort of property in a swap for money, and the buyer purchases it by contributing that money. Sale is a changeless agreement. When a person sells any kind of property, that person loses all benefits and privileges over that property. The person who purchases that equity converts the new owner and possesses that property.

The buyer and her/his descendants use that property forever unless they sell it to a different party. Any type of property can be sold, including houses, land, artifacts, any property, or article that can be subjected to be sold. 

After the sale, the sellers lose all the powers and permissions over the property. They can not call their property of theirs. They lose all kinds of responsibilities of that property as well. Once the property is sold, the buyer gets to make every single decision about the property, and the new owner is responsible for the property.

What is Lease?

A Lease is a legal procedure that involves the owner of property renting out their property for a longer time as compared to renting. Leasing a property allows the landlord to transfer the possession of the equity, for, e.g., a house, land, or another sort of property for long-term occupancy. 

While leasing a property, the owner of the property does not lose possession of the house or the land, but the tenants can stay for the period that has been signed in the lease agreement. The original owner of the property gets paid a particular amount of rent for the signed period. 

Through Leasing a property, the landlords can make a stable income through their tenants. The property still belongs to the landlords, and their tenants can use the property temporarily to exercise their right to stay at the place while simultaneously being partially accountable for the property while they are leasing the property. 

Main Differences Between Sale and Lease

  1. Selling is shifting the ownership to the purchaser. Whereas leasing holds the owner the same, the purchaser gets a lease from the owner briefly.
  2. The seller dissipates all sorts of advantages over the property after selling. But after putting the property on lease, the owner does not lose the rights. The property still belongs to the landlord. By giving to lease the property, they provide it to the purchaser to use briefly.
  3. The sale of the property is perpetual. It cannot be returned unless the new owner sells it back to the former owner. Meanwhile, the Lease is for a specific time, decided by the seller and buyer.
  4. Selling a property involves more capital than leasing. By selling a property, the landlord gets a lot of money depending on the sort of property that they are selling. To lease a property, the landlord requires more limited money. Leasing a property is not very expensive, but again, the expense of money depends on the sort of property that the owner is leasing.
  5. Once the property has been sold, the purchasers can get a loan upon that property if they desire, but after the leasing, the purchaser can not take a credit against that property as it is not owned by them.

Conclusion 

Sale and Lease both have their advantages and disadvantages. By selling the property, the owner gives away their ownership to accept cash. Whereas by allowing to lease, the owner also gets to appreciate the cash, and they also do not lose ownership over their property. Selling a property produces more cash than giving it for lease, but if the property is leased for a long time, then even the lease can earn a lot of funds.

References

  1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/nylr56&section=46
  2. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/ilr68&section=34
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