What Is a Master Lease Agreement?

by Sandra Parker - Updated September 26, 2017

A lease is a financial instrument used to secure payment against goods or a service for a specified amount of time. It must be agreed to by both the individual and company leasing the goods or service and the individual or company receiving the goods or service.

Definition

A master lease agreement is analogous to an umbrella. It is the lease agreement that a company uses to acquire equipment or real estate in multiple locations without having to execute a new lease each time.

Terms and Conditions

With a master lease agreement, a lessee, under the same terms and conditions as the original acquisition, acquires any additional equipment or real estate. If new terms on conditions need to be negotiated, a new master lease agreement should be executed.

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Subleases

There may be one or multiple subleases under the master lease agreement. There are no limits to the number of subleases a firm can have.

Term

A master lease agreement has a finite term and will need to be renewed or have a new one drawn up at the end of the term.

Termination

If either side terminates a master lease agreement before the term is up, it is usually in writing and the lessor may request a balance to be paid to exit.

References

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