If the lessor fails to get paid that means that the lessee has defaulted on his lease obligation.

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The lessee, by contrast, is not obligated to purchase the item.

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In order to maintain the same economic return, using the seven year recovery, the financial institution will definitely have to levy a higher monthly payment to the lessee.

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This is because, in a normal lease agreement, the lessee is expected to use the land more or less as it is with minimal investment in the land itself, while paying rent to the lessor.

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