Abstract. The antichresis lease appears in many civil law countries. It requires a lump sum tenant payment that is to be returned in full at the end of the lease, where the custody of the lump sum is the property owner's compensation in the property lease. This paper develops a theory of the antichresis emphasizing the countervailing effects of the tenant liquidity risk and owner input supply moral hazard. The model predicts that the antichresis dominates when tenant activities are largely independent of owner supply of inputs whereas the periodic rent contract dominates when tenant activities depend upon the owner inputs. At the same time, the antichresis insulates owners from tenant liquidity risks while rent contracts do not, making antichresis leases more attractive for tenant populations with greater liquidity risk. The empirical evidence from Bolivian property leases supports the main theoretical predictions regarding property type and neighborhood population characteristics
