Similarities and Differences Between a Lease and a Rental Agreement
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What AreThe Similarities and Difference Between a Lease and a Rental Agreement?
There are many similarities and a few important differences between lease and rental agreements. First, here are some similarities of agreements pertaining to rental property.
Both a rental and a lease agreement should have the following attributes:
- Both agreements should always be in writing. There are no known exceptions on this planet to this rule. Of course, it's easier and more pleasant to make an oral rental lease agreement because both landlord and tenant are happy to be making a deal. However, should a problem arise, oral agreements are less useful and unenforceable.
- A residential lease agreement should have a clear identification of the monthly rent or lease amount for rental apartments and when, during the month, the rent is due. Most agreements call for the agreed payment to be made in advance, unlike a mortgage loan which is paid in arrears -- on the first day of every month during the term of the agreement.
- There should be a clear statement of the length of the agreement. Whether your agreement is a pure month-to-month occupation or a five-year rental lease agreement, the length of the term should be clearly specified. Also, any agreed-upon renewals or extensions of the agreement terms should also be clearly identified.
- Identify whether or not this is a fixed-term rental or lease agreement, which normally specifies that the landlord cannot increase the rental amount during the term of the agreement or a more open-ended and flexible contract. For obvious reasons, this can be a critical component of any tenant lease or rental agreement.
Primary differences in a rental and lease agreement often include:
- Lease agreements tend to be longer than rental agreements, but this is not a requirement. Many people tend to consider a rental agreement to be a short-term agreement (normally month-to-month), while typical use of the term "lease" often refers to a longer-term document -- six months to five years or beyond.
- Oral lease agreements are often invalid. You learned above that neither agreement should ever be an oral contract. But many state courts will at least consider ruling on oral rental agreements that were intended to last less than one year. The majority of state courts will often decline to even hear or consider enforcing an oral lease agreement with original terms longer than one year.
- Unlike short term rental agreements (e.g., month-to-month), the majority of lease agreements do not automatically renew themselves. Many month-to-month rental agreements have language that states the agreement will automatically renew every month, while both parties (landlord and tenant) have to provide only 30 days' notice of a termination of the contract. A three-year lease may state that the parties agree to the term and rental amount to be fixed for three years.
There may be other differences important to both parties, almost all of which are negotiable before
any contract is signed and executed. As long as the language is clear and the terms are acceptable to both parties, either agreement should be workable.
The above-listed tip is for informational use only. Always read entire specific documents and language before executing any contract or agreement.
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