A dummy lease agreement is a legal contract that states the terms of renting an item or property, without actually transferring the ownership rights. The dummy lease defines the rental period, cost, reasons for terminating the agreement and other important details. In essence, it’s an agreement between two parties, the Lessor and the Lessee, whereby the Lessee agrees to occupy or use an item or property belonging to the Lessor in return for periodic payments. Dummy leases are typically used in business transactions as a way to preserve both parties’ interests as well as abiding by taxation laws.