Closed-End Lease

A rental agreement that puts no obligation on the lessee (the person making periodic lease payments) to purchase the leased asset at the end of the agreement. Also called a "true lease", "walkaway lease" or "net lease".

Investopedia Says:
Since the lessee has no obligation to purchase the leased asset upon lease expiration, that person does not have to worry about whether the asset will depreciate more than expected throughout the course of the lease. Thus, it is argued that the closed-end leases are better for the average person.

For example, suppose your lease payments are based on the assumption that the $20,000 new car that you are leasing will be worth only $10,000 at the end of your lease agreement. If the car turns out to be worth only $4,000, you must compensate the lessor (the company who leased the car to you) for the lost $6,000 since your lease payment was calculated on the basis of the car having a salvage value of $10,000. Basically, since you are buying the car, you must bear the loss of that extra depreciation. But, if you have a closed-end lease, you don't buy the car so you don't bear the risk of depreciation.

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Financial lease stipulating that the user (rather than the owner) of the leased property shall pay all maintenance costs, taxes, insurance, and other expenses. Many real estate and oil and gas limited partnerships are structured as net leases with Escalator Clauses, to provide limited partners with both depreciation tax benefits and appreciation of investment, minus cash expenses. See also Gross Lease.

Consumer lease that does not give the lessee the option of buying the leased property when the lease expires. The lessee makes a fixed monthly payment for a specified number of months, and has no further obligation afterward. This type of lease is most common in automobile leasing. Contrast with Open-End Lease which may have a Balloon Payment at the end of the lease.

A Lease whereby, in addition to the rent stipulated, the lessee (tenant) pays such expenses as taxes, insurance, and Maintenance. The landlord's rent receipt is thereby "net" of those expenses. See Triple Net Lease.
Example: Baker leases retail space from Abel on a net lease. Abel can expect to receive the full rent without deducting forOperating Expenses which are paid by Baker. In practice, various levels of net leases are often used to designate arrangements where the tenant pays only some types of expenses and the landlord pays other types.