Rent vs Lease . . . Have you often wondered what the differences were between Renting and Leasing? In real estate, a Lease is a Contract that gives the Tenant the right to live in a property for a specific fixed period of time after which the terms of the Contract expires. Through a lease, the Landlord and Tenant mutually agree to fixed terms and conditions, such as the amount of rent, rules regarding pets, duration of the agreement (typically 12 months or 24 months), etc.
Because a lease is a contractual agreement, both parties are obligated to abide by it for its duration. A lease is mutually beneficial. Neither party can change the agreement without written consent from the other. A tenant can’t stop paying rent or vacate the property during the lease without violating the agreement. By the same token, the Landlord can’t arbitrarily change the terms and conditions or force the Tenant to move during the lease period. When the lease expires, Tenants are automatically shifted to a “month-to-month” rental agreement unless or until both parties sign a new lease with a new expiration date.
It is interesting to note that rent are also the payments made under the terms of a lease. Real estate leases are also commonly known as “Rental Agreements.”
When you Rent you typically are paying month to month. At the end of each 30-day period, the landlord and tenant are both free to change the terms. Month-to-month agreements come with major pros and cons for both tenants and property owners. For tenants, month-to-month rental agreements give them the freedom to move whenever it’s most convenient. When renting, at the end of a 30-day period as long as the Tenant gives “proper notice,” as defined by the terms of the month to month agreement (and by local laws i.e. – 30 Day Notice, 60 Day Notice, etc.). A Tenant can just move without having to worry about transferring or breaking a lease agreement. For Landlords this makes rental income uncertain. To offset this uncertainty, many Landlords choose to charge month-to-month Tenants a higher rental rate than those who Lease.
Some of the laws governing Leases and Rentals may vary from state to state or county to county. Some areas may be subject to Rent Control laws. So in short, Leasing offers more long-term security to both Tenant and Landlord. Renting offers more flexibility.