Leases and Lease Purchase Agreements - Some Basic Considerations

Municipal governments in Tennessee are authorized by Tennessee Code Annotated, Title 7, Chapter 51, Part 9, to enter into lease and lease purchase agreements for the acquisition of capital improvement property. Such agreements are limited by T.C.A. 7-51-902 to the acquisition of "capital improvement property" for terms of up to 40 years or for the useful life of the property, whichever is less. The term "capital improvement property" is defined by T.C.A. 7-51-901(1) as "any real or tangible personal property needed for a governmental purpose and having a useful life of one (1) year or more, and any real or personal property with respect to which capital outlay notes can be legally authorized and issued by a municipality."

Tenn. Municipal Law Series Report No. 2

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