A lessor is a person or organization that owns an asset and allows another party, known as the lessee, to use this asset under a lease agreement. Leases are commonly used for properties, vehicles, equipment, or other assets where the lessee pays for the privilege of use without owning the asset. The lessor retains ownership of the asset while granting the lessee the right of use for an agreed period. Terms such as rental rate, lease duration, and conditions of use are defined in the lease agreement.
For example, if a business leases office space from a commercial real estate company, the real estate company acts as the lessor. Similarly, an equipment rental company that leases construction machinery to contractors is the lessor for that agreement. Lease arrangements are essential in various industries, offering flexibility to lessees while ensuring financial returns for lessors.
Lessors must be mindful of accounting and legal regulations, such as those outlined under [IFRS 16 - Leases](https://www.ifrs.org/issued-standards/list-of-standards/ifrs-16-leases/) and similar standards, ensuring compliance in lease-related reporting and agreements.