The Major Difference Between Rental Agreements and Leases on Rental Homes
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What Is the Major Difference Between Rental Agreements and Leases on Rental Homes?
The terms “rental agreement” and “lease” are often used interchangeably, but legally they are different. There are, of course, similarities that are noteworthy. In both cases, tenant and landlord have come to agreement that the former will occupy the property of the latter, which is the most important factor. Rental homes transactions should have one form of agreement or another.
There is no “best” type of agreement to cover rental houses. These two forms of contractual occupancy are simply different in their perspective and some of their language. It is important to learn exactly what a prospective landlord has in mind when he/she mentions a rental agreement or lease. If you simply ask the landlord a desired time frame for which the house should be occupied, you should learn what type of agreement really pertains to this rental property. Here are the primary differences in the two agreements.
- Rental Agreement. This normally means you will occupy rental houses on a month-to-month basis. Unless a specific end of term date is negotiated, this agreement is open-ended, meaning that you could occupy the rental property for years, if you and your landlord so desired. However, it also means that on less than 30 days' notice, either party could terminate the contract, raise the rent, change other terms, etc. Rental agreements are common, sometimes work very well for both parties, and at other times create problems.
- Lease. When you lease rental property, you'll agree to a fixed term, sometimes with options to renew at certain dates, at a fixed rental price. Your landlord will agree that this term and price are acceptable. This agreement tends to work better with rental houses since both parties are aware of the most important components of the agreement. This additional stability for both tenant and landlord is often important. Problems could still arise if the circumstances of one party or the other change dramatically during the lease term, making it difficult for one or the other to fulfill the terms of the contract.
Many of the remaining terms, rights, responsibilities, and legal issues will be similar in both forms of agreement. If you're looking to occupy for the short term, consider yourself quite “mobile,” or have high confidence your prospective landlord has no plans to raise rents or change tenants frequently, a rental agreement might be appropriate. Should you value more stability when you rent real estate, a fair lease may be the better choice.