Also known as: lessees of goods · lessee
Written by attorneys · grounded in primary & secondary sources — see below
A party who acquires the right to possess and use goods under a lease contract from the owner in exchange for consideration.
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Legacy Motors leased commercial vehicles to Linden Logistics under a five-year agreement that gave Linden exclusive possession and control of the fleet. A prior perfected security interest had been created by the lessor. Linden Logistics received the vehicles and began operations, taking its leasehold interest free of the security interest.
Lars Lindstrom leased specialized manufacturing equipment from Lexicon Media for a term that could extend beyond the period allowed by the rule against perpetuities. The lease created a future interest in favor of a class of potential assignees that might remain subject to an unfulfilled condition for longer than the permitted period. The limitation failed under the rule because the interest could vest too remotely.
Layla Lane leased warehouse space from Lattice Systems under an agreement that incorporated a prior affirmative covenant requiring the occupant to repair and maintain the loading docks. The covenant had been created before the lease and directly concerned the leased property. Layla therefore became obligated to perform the repairs because the lease transferred possession of the burdened premises.
Lucas Lee leased computer servers to a startup under terms that created a future interest in favor of a shifting class of future lessees. The interest of any class member could remain subject to an unfulfilled condition precedent for longer than the perpetuities period. The limitation was therefore invalid as to the class members whose interests might vest too remotely.
Laura Lewis leased delivery trucks from Linden Logistics under a contract that included a prior affirmative covenant granting the occupant access to a shared maintenance facility. The benefit could be enjoyed by the lessee without diminishing its value to the lessor or materially increasing the burden on the obligated party. Laura therefore received the covenant benefit during the lease term.
Lily Lopez leased office furniture from Legacy Motors under an agreement that carried forward a prior affirmative covenant allowing use of a common conference center. The benefit could be enjoyed by the lessee without reducing its value to the lessor or materially increasing performance burdens. Lily therefore held the covenant benefit for the duration of the lease.
A lessee in the ordinary course of business takes its leasehold interest free of a security interest created by the lessor even if the security interest is perfected and the lessee knows of its existence.
Supporting sources