Lease vs. Rent

Lease
Rent

Rent and Lease are terms used with respect to real estate. Both are used in context to using a land, building etc in return for a payment. The two differ in terms of the time period, payment and type of contract.

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Lease

Rent

Meaning It is a contract renting land, buildings, etc., to another; a contract or instrument conveying property to another for a specified period Renting is an agreement where a payment is made for the temporary use of a good or property owned by another person or company
Flexibility Not flexible It is flexible
Time Long term Short term
Agreement Pre determined and cannot be broken without breaking the lease Pre determined and terms can be changed
Mode of agreement Written Oral/Written
Stability Both landlord and tenant have stability Not much stability
Affordability Long-Term financial commitment with penalties (if cancelled before contract expiry period) Can be cancelled anytime with no or limited (small) amount penalties.

Contents: Lease vs Rent

edit Definition

Rent is defined as

  1. a payment made periodically by a tenant to a landlord in return for the use of land, a building, an apartment, an office, or other property. 
  2. a payment or series of payments made by a lessee to an owner in return for the use of machinery, equipment, etc.

Lease is defined as

  1. contract renting land, buildings, etc., to another; a contract or instrument conveying property to another for a specified period or for a period determinable at the will of either lessor or lessee in consideration of rent or other compensation.
  2. the property leased.

edit Time

Standard rental agreements are month-to-month, and there is no set period of residence. Both the landlord and tenant are free at the end of each 30-day period to make changes to the rental agreement, subject to any rent control laws. A lease has a finite term, which is often a long period of time, generally in years. During this time period, also known as the duration of the lease, the tenant and the landlord are bound to uphold the terms of the written agreement.

edit Terms of the agreement

Having a lease means that neither party may change any terms of the agreement until the lease expires, unless both parties agree to the change. For example: If the amount of the lease is $1000 then it cannot be changed unless mutually agreed. A rent agreement can be changed at any time at the discretion of the parties. It is generally the landlord who can make the changes after giving proper notice to the tenant. For example: If the rent fixed in a rent agreement is $1,000 but the landlord wants higher rent, then he can issue a written notice justifying the increase and the rent amount can be changed. It is then up to the tenant to either pay the new rent, negotiate with him or decide to vacate.

edit Breaking the agreement

Under a lease, tenants are obligated to make monthly rent payments as agreed upon, as well as follow any code of conduct or other stipulations in the lease while it's in effect. It also means that a tenant may not vacate the property without breaking the lease. In some cases, the tenant may be held liable for the remaining amount of rent due under the lease, or they may be required to find another person to fulfill their end of the lease. In a rental agreement, this is not so unless specifically mentioned. A tenant can vacate the property after giving due notice and even the landlord can ask for an increase in payment at any time during the agreement. Hence a rental agreement is more flexible in its terms than a lease.

edit Renewal

A lease may not automatically be renewed after the expiry of the time period, unless specified in the agreement. Rental agreement, on the other hand is automatically renewed every month unless either parties give notice to vacate the place.

edit Oral/Written

While a Lease agreement is always in writing, a rental agreement can be written or oral. This may also vary on the place on stays in.


edit References

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"Lease vs Rent." Diffen.com. Diffen LLC, n.d. Web. 19 Sep 2014. < http://www.diffen.com/difference/Lease_vs_Rent >

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Comments: Lease vs Rent

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Anonymous comments (2)

January 23, 2014, 9:15am

quite useful.

— 119.✗.✗.25
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August 26, 2010, 4:42pm

In some states (such as Michigan) a lease agreement may automatically turn into a rental agreeement with the same terms as the lease if the lease is allowed to expire and the tenant is allowed to remain.

— 192.✗.✗.27
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