Difference between Rental Agreement and Lease Agreement
A rental agreement provides is a month-to-month agreement that is automatically renewed at the end of the period unless the tenant or landlord ends it by giving written notice. For these month-to-month rentals, the landlord can change the terms of the agreement with proper written notice.
In Contrast, A lease gives the tenant the right to live in a dwelling for a fixed time period — usually 12 months, but it could be any length of time ranging from three months to 24-plus months.
Through a lease, the landlord and tenant mutually agree to fixed terms and conditions, such as the rent, rules regarding pets, duration of the agreement, etc. Neither party can change the agreement without written consent from the other.
A lease agreement or a rental agreement is a vital legal document that should be completed prior to a landlord renting property to a tenant. While both agreements are similar in nature, they are not the same and it is important to understand the differences.
A lease agreement is a contract between a landlord and a tenant that covers the renting of property for long periods of time, usually a period of 12 months or more. The lease agreement is very specific in detailing the responsibilities of both parties during the lease and it includes all the necessary information to ensure that both parties are protected. The length of the lease and the amount of monthly rent are documented and cannot be changed. This ensures that the landlord cannot arbitrarily just raise the rent and the tenant cannot just leave the property whenever they want without repercussion.
The lease agreement is effective for the specific time stated in the agreement and is then considered ended. If the tenants wish to remain in the property, both parties must enter into a new lease agreement. A landlord is not obligated to renew the terms of the old lease and is free to change terms and rental amounts if desired. For this reason, some tenants prefer to sign a longer term lease if the monthly rent is very reasonable and in an area where rents are likely to increase during the term of the lease.
A rental agreement differs from a lease agreement in that it is not a long term contract and usually occurs on a month to month basis. This month the month lease agreement expires and then renews each month upon agreement of the parties involved. All the same stipulations are included in a month to month lease as are in a standard lease; however, either the tenant or the landlord can alter the terms of the agreement at the end of each month. The landlord has the option to raise the rent or request that the tenant quit the premises without violating the rental agreement. A landlord must give a proper 30 day notice to quit, however, prior to requesting the tenant to leave the property.
Both lease and monthly rental agreements have their advantages and disadvantages. Rental agreements allow landlords to rent properties that might not be desirable to long term renters. It is also advantageous when rental amounts can rise quickly, allowing the landlord to renegotiate the terms of the agreement from month to month. They benefit tenants who only need to stay in a certain place during a transition or when they are unsure of how long they want to rent in the specific area.
A lease agreement, on the other hand, is advantageous to a landlord by providing the stability of guaranteed, long term income. It is advantageous to a tenant because it locks in the rental amount and length of lease and cannot be changed even if property or rent values rise.