What is a tank lease agreement?
A contractual arrangement where a propane supplier retains ownership of the storage tank and leases it to the customer for a recurring fee, typically with exclusivity and removal clauses.
In a tank lease agreement, the propane supplier owns the physical tank installed at the customer's property and charges a monthly or annual fee for its use. The customer does not purchase the tank itself. This arrangement is the standard model in Florida's propane market, particularly for residential and small commercial accounts.
Key terms commonly appear in these agreements:
- Exclusivity clauses require the customer to purchase all propane from that supplier, preventing them from refilling the same tank through competitors.
- Removal and reconditioning fees apply if the customer ends service or switches suppliers. These fees cover the cost of retrieving, inspecting, and preparing the tank for reuse or recycling.
- Maintenance responsibility typically falls to the supplier, though customers are responsible for basic tank access and safety clearance around the unit.
- Lease terms vary from month-to-month arrangements to multi-year contracts with early termination penalties.
The tank remains the supplier's asset regardless of how long it sits at a property. If a customer discontinues service, the supplier retrieves the tank within a specified period. Some agreements include buyout provisions that allow customers to purchase the tank outright and break the exclusivity arrangement.
Understanding lease terms before signing is important, as removal fees and service restrictions directly affect switching costs and fuel purchasing flexibility. When evaluating propane suppliers, compare their lease terms alongside pricing and service reliability.