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What is a Full-Service Lease?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
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  • Last Modified Date: 25 August 2016
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Sometimes referred to as a rental lease, a full-service lease is any type of lease arrangement where the lessor covenants to maintain the leased item for the benefit of the lessee or renter. This type of lease is sometimes utilized when it comes to leasing commercial property, private housing, or even equipment for construction or transportation. All costs associated with this complete maintenance arrangement are calculated into the monthly payments that are remitted to the lessor.

One of the more common examples of a full-service lease is found with housing situations. With a lease of this type, the owner of an apartment building or house commits to providing all utilities as part of the services extended to the tenant. In addition, the owner also covers expenses such as repairing damaged water pipes, replacing any major appliances that were included with the apartment amenities, and handling the upkeep of the landscaping around the building. The tenant in turn agrees to abide by all provisions within the lease agreement, including paying a specific monthly rental to the owner for the duration of the lease.

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The same general approach is often used with the rental of commercial property. The landlord pays all utilities and maintains the structure, and in turn charges a monthly rental payment for the use of the facilities. As long as the owner maintains the property in accordance with the provisions of the lease, and the tenant does likewise, the full-service lease remains in effect up to the end date specified in the lease agreement. Assuming both parties are happy with the arrangement, they may choose to either invoke a rollover clause in the lease that automatically renews the contract for another period, or enter into a new full-service lease that allows the relationship to continue for several more years.

A full-service lease provides benefits to both parties involved in the contract. For the tenant, there is no need to establish utility accounts with various providers, or pay the deposits that those utility companies may require before extending services. In the event that a major appliance breaks down, the tenant does not have to be concerned with its replacement. Should the electrical wiring or the plumbing suffer some sort of breakdown, the owner deals with the repairs, with no out of pocket expenses incurred by the tenant.

The owner also enjoys several benefits as a result of the full-service lease. The arrangement often attracts quality tenants that choose to continue the business relationship over a number of years. In the event that repairs of some type must be made, the owner can make decisions on how to manage those repairs so that the integrity of the property is maintained. In many countries, the expenses incurred by this type of lease arrangement also offer significant tax breaks for the owner, which may be especially helpful if he or she owns several different properties.

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