Equipment lease agreement

An owner lets a business or person use equipment for a term in exchange for rent, and gets it back in good condition. Fill in the equipment and terms, send one link, and the lessee completes and signs.

An equipment lease lets a lessee use equipment the lessor owns for a fixed term in return for rent, while the lessor keeps title. It covers delivery, maintenance, insurance, what happens if the equipment is damaged or the lessee stops paying, return at the end, and any option to buy.

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What it covers

When to use it

What it does not do

Signing, witnesses and delivery

The agreement

Equipment Lease Agreement

This Equipment Lease Agreement (the "Lease") is made between [Lessor name (owner of the equipment)], of [Lessor address] ("Lessor"), and [Lessee name (person or company)], of [Lessee address] ("Lessee"). Lessor agrees to lease the equipment described below to Lessee on the terms below. Lessor and Lessee are each a "Party" and together the "Parties".

1. Equipment

Lessor leases to Lessee the following equipment, with all attachments, accessories and manuals: [Equipment description with serial numbers] (the "Equipment"). The Parties agree that the value of the Equipment for the purposes of this Lease is [Agreed value of the equipment] (the "Agreed Value"). The Equipment shall be kept and used at the following location and shall not be moved elsewhere without Lessor’s prior written consent: [Where the equipment will be kept or used].

2. Term

The term of this Lease begins on [Commencement date] (the "Commencement Date") and continues for [Term (months)] months (the "Term"), unless ended earlier under this Lease. If Lessee keeps the Equipment after the Term without Lessor’s written agreement, the Lease continues month to month at 150% of the monthly Rent, terminable by either Party on fifteen (15) days’ written notice.

3. Rent and Deposit

Lessee shall pay Lessor rent of [Monthly rent] per month (the "Rent"), in advance, on the [Rent due on day of month] day of each month during the Term, the first payment due on the Commencement Date and prorated for any partial month, without setoff or deduction. If any payment is not received within five (5) days after it is due, Lessee shall pay a late fee of [Late fee (after 5 days)]. Lessee shall also pay all sales, use and personal property taxes assessed on the Equipment or the Rent during the Term.

On signing, Lessee shall pay a security deposit of [Security deposit (or $0)] (the "Deposit"). Lessor may apply the Deposit to any amount Lessee owes, and Lessee shall restore any amount applied within ten (10) days of demand. Lessor shall return the unused Deposit, without interest, within thirty (30) days after the Equipment is returned and all amounts due are paid.

4. Delivery, Acceptance and Disclaimer

Lessor shall make the Equipment available at Lessor’s premises on the Commencement Date, and any delivery is at Lessee’s cost. By taking possession Lessee accepts the Equipment as being in good working order, except for any defect Lessee reports in writing within two (2) business days. LESSOR LEASES THE EQUIPMENT AS IS. Lessor makes no warranty of any kind, express or implied, including merchantability or fitness for a particular purpose, and is not liable for any loss, downtime or lost profit arising from any defect in or failure of the Equipment.

5. Use

Lessee shall use the Equipment only in the ordinary course of its business, by trained and, where required, licensed operators, in accordance with the manufacturer’s instructions and all applicable laws and permits. Lessee shall not sublease, lend or part with possession of the Equipment; permit any lien to attach to it; alter it without Lessor’s written consent; or use it unlawfully or in a hazardous manner. Lessor may inspect the Equipment on reasonable notice.

6. Maintenance and Repairs

Maintenance responsibility: [Maintenance responsibility]. In every case Lessee shall keep the Equipment clean, lubricated and fueled, perform daily operator checks, promptly report any malfunction, and not operate Equipment that is unsafe or needs repair. Repairs shall be made only by Lessor or a service provider Lessor approves. Whichever option applies, Lessee pays for all repairs made necessary by accident, misuse, neglect, overloading or operation contrary to instructions.

7. Ownership

The Equipment is and remains the sole property of Lessor, and Lessee acquires no interest in the Equipment other than the right to use it under this Lease. Lessee shall keep the Equipment free of liens arising through Lessee and shall notify Lessor immediately of any attempt to seize or levy on it. Lessee authorizes Lessor to mark the Equipment and to file a precautionary financing statement under the Uniform Commercial Code.

8. Risk of Loss

From delivery until return, Lessee bears the entire risk of loss, theft, damage and destruction of the Equipment from any cause. Lessee shall promptly repair any damage at its cost. If any item is lost, stolen or damaged beyond economic repair, Lessee shall, within thirty (30) days, pay Lessor the Agreed Value of that item (or its proportionate share) plus Rent accrued to the date of payment, less any insurance proceeds Lessor actually receives, and the Lease ends as to that item.

9. Insurance and Indemnity

Lessee shall, at its cost, keep in force throughout the Term: (a) property insurance covering the Equipment against all risks, including theft, for not less than the Agreed Value, naming Lessor as loss payee; (b) commercial general liability insurance of not less than one million dollars ($1,000,000) per occurrence, naming Lessor as additional insured; and (c) if the Equipment is a vehicle, automobile liability insurance meeting state requirements. Lessee shall deliver certificates of insurance before delivery and on each renewal.

Lessee shall indemnify, defend and hold harmless Lessor from every claim, loss, liability, fine and expense (including reasonable attorney fees) arising from the possession, use or operation of the Equipment during the Term, except to the extent caused by Lessor’s gross negligence or willful misconduct. This indemnity survives the end of this Lease.

10. Return

At the end of the Term or on earlier termination, Lessee shall at its cost return the Equipment to Lessor’s premises, cleaned, with all attachments and accessories, in the same condition as when delivered, ordinary wear from proper use excepted. Lessee shall pay the cost of any repair or cleaning needed to bring the Equipment to that condition, and Rent accrues at the holdover rate until the Equipment is actually returned.

11. Purchase Option

Purchase option: [Purchase option at end of term]. If an option applies, Lessee may exercise it by written notice at least thirty (30) days before the end of the Term, provided no Event of Default is continuing, by paying on the last day of the Term the option price according to the option chosen: fair market value as agreed by the Parties or, failing agreement, as determined by an independent appraiser chosen by Lessor at Lessee’s cost; the fixed option price of [Fixed option price (or $0 if not applicable)]; or one dollar ($1.00); plus applicable sales tax and all other amounts then due. On payment, Lessor shall transfer the Equipment by bill of sale, as is, with a warranty of title only. If no option applies, Lessee has no right to buy the Equipment.

12. Default and Remedies

Each of the following is an "Event of Default": (a) Lessee fails to pay any Rent or other amount within ten (10) days after it is due; (b) Lessee fails to keep the insurance required by Section 9; (c) Lessee breaches any other term of this Lease and does not cure it within fifteen (15) days after written notice; or (d) Lessee becomes insolvent, makes an assignment for the benefit of creditors, becomes the subject of a bankruptcy or receivership proceeding, dissolves or ceases business.

On an Event of Default, Lessor may terminate this Lease by written notice; declare immediately due all Rent and other amounts accrued and, as liquidated damages and not as a penalty, the present value of the Rent for the remainder of the Term discounted at four percent (4%) per year, less the net proceeds Lessor obtains by re-leasing or selling the Equipment after reasonable efforts; and retake the Equipment, for which purpose Lessee authorizes Lessor to enter any premises where it is located without notice or court order, provided there is no breach of the peace. Lessee shall pay all costs of repossession, repair and re-leasing or sale, and Lessor’s reasonable attorney fees. Lessor’s remedies are cumulative, and no delay or partial exercise is a waiver.

13. Assignment

Lessee may not assign this Lease or any interest in the Equipment without Lessor’s prior written consent. Lessor may assign this Lease, the Rent or the Equipment without Lessee’s consent, and Lessee shall, on notice, pay Rent to the assignee without asserting any defense or setoff it may have against Lessor.

14. General

This Lease is governed by the laws of the State of [Governing law (state)]. It is the entire agreement between the Parties about the Equipment and supersedes all prior proposals and quotes. It may be amended or waived only in a writing signed by both Parties. If any provision is held unenforceable, the remainder remains in effect. Sections 8, 9, 10 and 12 survive the end of this Lease. Time is of the essence.

15. Electronic Signatures; Counterparts

This Lease may be signed electronically and in counterparts, each of which is an original. The electronic execution record, timestamps and document fingerprints kept by the signing platform are conclusive evidence of execution. Each person signing represents that they are authorized to bind the Party for whom they sign.

Signatures

Lessor (owner) · Lessee

Equipment Lease Agreement FAQ

Who is responsible for maintenance and repairs?

You choose. The default in most equipment leases is that the lessee maintains the equipment at its own cost and returns it in the same condition, ordinary wear excepted, because the lessee is using it. The alternative, where the lessor handles routine maintenance and the lessee pays only for damage it causes, suits short leases and equipment that needs specialist servicing. The agreement prints the choice you make.

What insurance does the lessee need?

Property insurance covering the equipment for its full agreed value against loss, theft and damage, with the lessor named as loss payee, and general liability insurance naming the lessor as additional insured. If the equipment is a vehicle, auto liability coverage as well. The lessee should give the lessor a certificate of insurance before delivery and keep the policy in force for the whole term.

What is a purchase option and which should I pick?

A purchase option lets the lessee buy the equipment at the end of the term. A fair market value option keeps the deal a true lease for tax purposes and the lessor keeps the residual. A fixed price option gives certainty. A one-dollar option means the lessee is really buying on installments, which is fine, but accountants and the UCC treat it as a financed sale and the lessor should file a financing statement. Choose no option if you want the equipment back.

What happens if the equipment is damaged or stolen?

The lessee bears the risk of loss from delivery until return. If the equipment is lost or destroyed, the lessee pays the lessor the agreed value stated in the lease less any insurance proceeds the lessor receives, and the lease ends for that item. If it is damaged, the lessee repairs it at its cost. Insurance is meant to fund those obligations.

Can the lessee fill in their own details?

Yes. Fill in the equipment, rent, term and your chosen options, leave the lessee’s name, address, email and delivery location blank, and send it. The lessee completes those fields when they open the link and you see them before you sign.

Can the lessor take the equipment back if rent is not paid?

Yes. After a missed payment and the cure period, the lessor may terminate the lease, enter the premises where the equipment is kept to remove it, and recover unpaid rent, the cost of repossession and repair, and damages for the remaining term less what the lessor gets by re-leasing or selling. Repossession must be done without a breach of the peace; the agreement gives the lessor the lessee’s consent to enter.

Related templates

This template is general information, not legal advice. Laws differ by state; review anything important with a lawyer.

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