In leasing law, what does "fair market value" refer to?

In leasing law, "fair market value" refers to the price that a willing buyer and a willing seller would agree upon in an open and competitive market. This definition emphasizes the importance of mutual consent and market conditions, capturing the true economic value of an asset as perceived by both parties involved in the transaction. It reflects the most accurate and unbiased assessment of worth, as it takes into account current market demand and comparable transactions.

The other options do not capture this comprehensive understanding of fair market value. While the lessor's price determination could influence what is perceived as fair market value, it doesn't encompass the negotiation aspect between both buyer and seller. A price set by a third-party appraiser may provide a professional opinion, but appraisers can differ in their evaluations, and their assessment may not always align with market realities. Lastly, the price stated in the lease agreement might reflect negotiations between parties but does not necessarily represent the fair market value unless those negotiations were conducted under conditions that mirror an open market.