In real estate transactions, a lease is a contract for a specific period of time — often 6, 11 or 12 months — after which the contract expires, whilst rental agreements are month-to-month contracts that renew automatically.
Contents: Lease vs Rent
Rent is defined as
- 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.
- 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
- 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.
- the property leased.
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, during which 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 or "break" 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 tenant 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 the landlord can ask for an increase in rent at any time during the agreement. Hence a rental agreement is more flexible in its terms than a lease.
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.