Additive Manufacturing Equipment Financing
Lease Terms And Conditions
A complete lease begins with a Master Lease Agreement, which lays out the terms and conditions that apply to all lease transactions. Each transaction is summarized on a Schedule that identifies the specifics of the particular transaction. Depending on the nature of the transaction, other documents may be necessary and could include an Acceptance Certificate, Landlord's Waiver, Secured Lender's Waiver, Certificate Of Incumbency , Evidence Of Insurance, and Lessee's Guaranty.
The terms and conditions in a lease set out the rules for payment, specify what may occur at the end of the lease, define the responsibilities of both lessor and lessee and generally provide a basis for action in the event there is a violation of the terms of the agreement. The effects of various terms and conditions can extend beyond the immediate matter of the equipment lease itself.
The most important impact of a lease beyond its immediate scope is the effect it has on tax and accounting treatment of the transaction. Leases that meet certain criteria qualify as operating leases; all others are finance leases. Operating leases enable the lessee to treat lease payments as ordinary expenses, booked as they are incurred. The full value of the payment obligation during the course of the lease is not considered part of the lessee's corporate debt and thus does not appear on a balance sheet, where it could restrict or impair the lessee's ability to shoulder additional obligations.
An operating lease may give the lessee the option to purchase the leased asset at the end of the lease. The purchase price is fair market value, arrived at by negotiation between the lessor and lessee, generally with reference to any available information about other sales of similar or identical equipment at the time of the lease termination and executed under similar conditions.
The terms and conditions of the lease also specify that the lessee will insure the leased equipment, maintain the equipment at his expense and pay any sales, use or property taxes on that equipment.
Additional clauses in the lease agreement stipulate what will happen in the event the lessee does not or cannot pay for the lease.
The benefits of any warranty or service obligation provided by the vendor are passed to the lessee. The lessee must keep and return the equipment in good order, but this responsibility is borne in part by the vendor during any warranty period and by the vendor's maintenance service or an independent maintenance service that is under contract to keep the equipment in proper working order.
NCP leases consist of more than one document. A master lease agreement sets out the terms and conditions for one or a group or leases. A schedule adds to this the specifics associated with the lease of a particular asset including the term of the lease and the payment amount.
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Cincinnati, Ohio 45202