Shell Lease

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Definition: Shell Lease

A lease is an agreement between the lessee (payer) and the lessor(owner) to use any asset for a specified period of time. The lessee will pay a certain amount to use the asset. In the case of shell lease, we deal with building as the asset involved.

Each tenant will have his/her own requirement and tastes. So in the case of a shell lease, the owner only gives the “shell” or the basic (outer) structure of the building on a lease to the tenant. The tenant will then finish the interiors of the buildings as per his requirements. If it is a warehouse, he will fit in all lighting and machinery equipment required. If it is a residential house, he will have to fit in kitchen cabinet, furniture, build interior walls and ceiling.

This is beneficial to the tenant in most of the cases because he can get it done as per his requirements. There might also be cases where he will be paid for getting all the work done. But then all the costs of rebuilding should be borne by the tenant and should comply with the rules.


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