What is a non-appropriation clause and why is it needed?

With a lease-purchase Agreement, a non-appropriation clause enables the lessee to account for the lease obligation as a current expense instead of debt and to terminate the lease agreement at the end of the current appropriation period without further obligation or penalty. This may be done only in cases where the lessee was unable to obtain funding for future payment obligations on the lease. Typically, the clause will contain a 'best efforts' requirement whereby the lessee must use its best efforts to obtain the necessary appropriation for the lease payments.

Related FAQs

• Why lease the equipment?

  Tax-exempt leasing is one of the simplest and most successful ways to purchase essential equipment and...

• What can be financed on a tax-exempt basis?

  Any personal property equipment or real property essential to the operations of the...

• Who owns the equipment under a tax-exempt municipal lease and how is the equipment titled?

  Title may either be retained by the lessor until all payments have been received or may be granted to the...

• What factors should be considered in deciding whether or not to use a tax-exempt lease?

  When acquiring financing for any asset acquisition decision, the principal financial objective is...

• What is a non-appropriation clause and why is it needed?

  With a lease-purchase Agreement, a non-appropriation clause enables the lessee to account for the...

• What is a municipal or tax-exempt lease?

  A municipal or tax-exempt lease agreement allows a political subdivision to use its annual...

• Is leasing easy?

  We take great pride in ensuring your leasing experience is easy.  Lease purchasing is much easier...

• What Are The Financial Process – Basic Steps?

  The Basic Steps of the Financial Process are: Obtain quote for equipment from qualified vendor Credit...

• What types of entities qualify for a municipal or tax-exempt lease?

  For the lease to qualify for the interest exclusion, a lessee under a tax-exempt lease must be a...

• How Do I Obtain a Quote?

  For a detailed quote, please call Sparta Commercial Services, Inc. on our toll-free line: +1 (800)...

• Prev
• Next