While the words lease and rental agreements are often used interchangeably, they actually refer to two different types of rental contracts. A lease is a detailed long-term rental contract whereas a rental agreement is a renewable short-term contract. Depending on the needs of the landlord and potential tenants, both have positive aspects and drawbacks.
A rental agreement
A rental agreement is a short-term rental contract, often for a 30 day or month-to-month period. Rental agreements automatically renew at the end of the period unless either the landlord or the tenant ends the agreement. In a rental agreement, the landlord can change the terms of the agreement as long as they provide proper written notice.
Rental agreements allow for more flexibility for both landlord and tenant. Potential tenants looking for a temporary residence, such as a student or person who is house hunting, tend to prefer rental agreements since they offer adaptability to fit their current needs. Rental agreements can also be useful for a landlord having difficulty attracting long-term tenants.
A lease gives the tenant the right to occupy a rental property with fixed terms for a longer period of time, generally for six months to upwards of 24 months. A tenant covered under a lease agreement can continue to live in the dwelling as long as they comply with the lease. Unlike rental agreements, leases do not automatically renew unless the landlord has it set up that way. In a lease agreement, the landlord cannot raise the rent or change the lease without written agreement from the tenant.
Leases offer long-term security for tenant and landlords alike. A tenant willing to sign a lease is looking for a home and understands that leaving the property will break their lease. Additionally, a lease prevents a landlord from evicting a tenant unless the tenant has violated the lease.
Before committing to either a rental agreement or a lease, reflect on your housing needs for the near future. If you are more transient, a rental agreement may be the way to go. If you are looking for a more permanent dwelling with security, a lease would better suit your needs.