What is a remarketing agreement?

A remarketing agreement documents a contractual arrangement under which a vendor agrees to help sell equipment when it goes off-lease at the end of its lease term or earlier due to lessee default or other termination.  A remarketing agreement generally requires the lessor to advertise, repair and dispose of the leased equipment following its surrender or repossession.  Some remarketing agreements apply only after the expiration of the lease term, while others require the lessor to remarket the leased asset upon early termination of the lease or in the event of lessee default.  Early termination provisions may require the lessee to make up any short-fall if the lessor fails to recover a specified amount from remarketing the equipment.

In a lease assignment, the remarketing agreement may grant the lessor an exclusive right to remarket the asset for a given period of time and obligate the lessor to purchase the leased asset if the lessor is unsuccessful in disposing of the asset.  The proceeds from the sale or re-lease of an assigned asset are commonly shared between the lessor and the assignee in accordance with a residual sharing agreement.