Leases vs. Rental Agreements: What's the Difference?

Flexibility and stability for the proprietor

Erin Eberlin is a property and property owner expert, covering rental management, occupant acquisition, and residential or commercial property investment. She has more than 16 years of experience in property.


Hispanolistic/ Getty Images

The terms rental contract and lease arrangement are typically utilized interchangeably, however they are rather various. A rental contract is one kind of contract a landlord can sign with an occupant. A lease arrangement is an arrangement the majority of people connect with leasing a residential or commercial property.

Rental agreements use more versatility for proprietors and renters, while lease arrangements use more stability. Learn the essential differences in between these two kinds of living arrangements.

What's the Difference Between Rental and Lease Agreements?

Length of Rental and Lease Agreements

Rental contracts are normally short-term. It is common for these agreements to be valid for a duration of one month. In specific cases, they can be even shorter, lasting just a week.

Lease arrangements are for a a lot longer term than rental contracts. The most common lease term is for one year, however leases can be for any length of time as long as the property manager and occupant consent to the length. They can be as brief as 6 months or as long as thirty years, which would be more common in industrial leases. The longer the lease, the more likely it is that your state will need it be in writing.

Renewing a Lease or Rental Agreement

Generally, rental agreements renew immediately as soon as the original term ends. All the regards to the initial contract are still valid, consisting of the length of the agreement. So, if the initial term was for a duration of 30 days, the contract will instantly renew for another one month.

Lease agreements do not instantly restore. Once the original lease term is over, the renter would need to sign a brand-new lease with the property manager if the property owner or renter wanted a long-lasting contract.

Regards to the Contract for Lease and Rental Agreements

The landlord can change the regards to the rental arrangement. It consists of changing the length of the contract or the rental rate. To make any changes, nevertheless, the proprietor needs to offer the tenant appropriate notice.

This written notification will differ based upon state law but is typically one month