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DIFFERENCES BETWEEN A RENTAL AGREEMENT AND A LEASE

Many renters assume that a rental agreement and a lease are the same thing. While they can be used interchangeably there are a few differences between a rental agreement and a lease. If you are looking into renting an apartment or house it is important to familiarize yourself with both of these terms as you will most likely need to sign one or the other in the near future.

One of the main differences between a lease and a rental agreement is the time the document is in place. A lease will generally have a time frame, such as a six month lease or a twelve month lease while a rental agreement will not. Most rental agreements will automatically renew at the start of each month and are not locked in for any particular time frame.

With a lease the tenant and the landlord are locked into a contract for the allotted period of time, whether this is three months, six months, twelve months or more. This is a fairly standard way of renting and many renters are happy to commit to a place for a year or more. What this means is that the renter must continue to make payments and live there during this time. The landlord must also obey the rules in place through the lease such as keeping the rent at a certain amount per month and maintaining pest control until the lease expires and ensuring the house is in good working order.

Lease Vs Rental Agreement

If you are renting through a rental agreement renters and landlords do not have this same security. Landlords run the risk of losing their tenant at the end of each month and thus having to go through the task of finding a replacement. Renters may be subject to higher rent each month, especially if the apartment is not governed by rent controlled or rent stabilizer laws.

If you are looking for a more permanent situation then both landlords and tenants will be safer working under a lease rather than just a rental agreement. This is especially a good idea if you are working on a budget. You don't want to have to start over on your budgeting just because the rent has increased month to month.

However, if you are unsure about where you will be in the next month or two, then living in a unit with a rental agreement in place is more flexible and more beneficial for you. Rental agreements tend to be the norm for areas where there are a lot of tourists, backpackers and students that cannot commit to a standard twelve month lease. A rental agreement allows you to go after thirty days (with adequate notice). If your school ends, if you get bored of the area or if you run out of money, then you are locked into a contract for the next eleven months.

Think about your specific situation when looking into the differences between leases and rental agreements. How financially secure are you? Can you commit to living in the same place and making steady payments for the time of the lease? Do you have a family and want stability or would you prefer the freedom of knowing that you can walk away in 30 days if you feel like it?

There is no right or wrong answer for tenants or for landlords. Both of these rental documents offer pros and cons for all parties involved. Look into the differences between a rental agreement and a lease as well as for houses that provide you with the documentation that will make you feel the most comfortable.

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