Lease agreement negotiations should focus on both negotiating terms that are appropriate for your unique business requirements and that harmonize terms across all lease documents.
Negotiate capital equipment lease terms to fit your operations: Most lessees anticipate returning equipment at end-of-lease without any issues but achieving this level of operational performance is rare. Some critical terms to pay attention to in lease agreement negotiations include:
- Achievable return requirements
- Easily met notice requirements in terms of form and delivery
- Well defined and capped interim rent and end of term options
- Limit default and default remedies
- Provide well defined and flexible lease end options
Master Lease Agreements for equipment lease programs define the basic terms and conditions of the lessor lessee relationship and obligations. All the most important elements of the lease program should be addressed in the Master Lease Agreement. Too frequently important terms are left to be defined in schedule documents which can lead to misunderstandings and additional cost. Understanding and capping the financial exposure created by such terms is crucial to managing leases cost effectively.
Comprehensively negotiate of all documents: Since most Master Leases defer to the Lease Schedule and other documents when there is a conflict of terms, it is critical that the documents be negotiated as actively as the master including:
- Lease Schedules
- Riders
- Schedules by asset type
- Other supporting documents
LPRS experts help clients negotiate lease rates, as well as Master Lease Agreements and other Lease Agreement terms and conditions to reduce lease program all-in cost and risk.
