Lease Rent Meaning and Differences
Lewis Wallace9/24/2019 9:06:25 AM 9/24/2019 9:09:34 AM
What is the difference between rent agreement and lease agreement?You might have asked yourself, what is the difference between lease or rent, which is better? When you are considering to rent out a property, you will need to decide if you wish to offer your tenant(s) a lease or a rental agreement.
However, it looks that these terms are often used interchangeably, their meanings differ. Before you rent out your property, be sure to take into account the differences between a lease and a rental agreement so you can make the best choice for your situation. Here are the most important differences everyone who is asking himself or herself this question should understand:
A rental agreement differs from a lease agreement because it is not a long-term contract and usually occurs on a monthly basis. Such month-to-month lease agreement expires and then renews each month upon agreement of the parties involved. So they often have no long-term requirements. At the end of each thirty-day period, both you and your tenant are free to change the rental agreement (subject to local rental laws).
Rental agreements, therefore, have more leeway. However, either the tenant or the landlord can alter the terms of the agreement at the end of the period. Think about changes like raising the rent asking the tenant to vacate the property or modifying the initial terms agreed. However often both landlord and tenant need to mutually agree and give a period of notice before any modifications can be made.
Another advantage is that rental agreements are useful if you’re having a problem attracting new tenants, or if your property is in an area that caters to students or professionals who move around often. A rental agreement typically renews automatically after each rental period has finished. 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 notice to quit, however, prior to requesting the tenant leaves the property.
In comparison to rental agreements, a lease has a set term, often for long periods of time, usually a period of 12 months, during which the tenant agrees to rent the property. A lease agreement is a contract between a landlord and a tenant that covers the renting of property, usually or more. The lease agreement is very specific in detailing the responsibilities of both parties during the lease and it includes all the necessary terms to provide protection to both parties.
During the duration of the lease, both must adhere to the lease agreement. For example, tenants agree to make monthly rent payments and follow the other obligations in the lease.
The length of the lease and the amount of monthly rent are documented and cannot be changed that easily. This ensures that the landlord cannot at random just raise the rent fee and the tenant cannot just leave the property whenever he or she wants to, without any consequence.
The lease agreement is effective for the specific time mutually agreed and is then considered ended. If the tenants wish to remain in the property, both parties must enter into a new agreement.
So, therefore, neither party is able to change any terms until the lease period expires. Unless both parties mutually agree to the change the terms. A tenant can’t vacate the property without breaking its lease, in which case they can be held liable for the rest of the rent due under the lease, or can be required to find someone else to take over the lease.
After the lease agreement is finished, the landlord is not obligated to renew the lease again based on the same terms. He or she 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.
Leases are useful for those landlords who want to “lock-in” a tenant for a specific period of time. If you have a mortgage payment to meet, for instance, knowing you’ll have a tenant for the next year can help you budget your expenses. Most tenants are familiar with long-term leases and will not have a problem committing.
Check out the following example agreement templates: