If you are a landlord, then you are most likely aware of the fact that there is a major difference between leasing property vs. renting it out. Many are still confused what the difference is between a lease agreement and a rental agreement. These two terms are often used interchangeably to refer to the same idea. However, they mean two different agreements. The major similarity between them is that they are both legally binding contracts but each with a distinct purpose.
What is a Lease Agreement?
Leasing a property involves requiring the tenant to sign a lease agreement. This is a contract between you as the landlord or owner of the property and the tenant. This arrangement gives the tenant the exclusive right to live in your property for a certain period of time, which can be one year. Once both parties signed the lease agreement, it becomes a binding contract.
The major terms and conditions that are often included in a lease agreement include the rent amount, duration of lease, and the specific rules the landlord set in using the property. It is advisable that the lease contract must be well-worded, clear, direct, and strong to help protect the interests of each party to the agreement.
What is a Rental Agreement?
Same as lease agreement, a rental agreement must also contain all the significant terms and conditions. The only major difference is the length or duration of the contract. A rental agreement has often a much shorter tenancy period, say 3 months, than a lease agreement does. It is also based on a month-to-month basis, depending on the agreement of the tenant and the landlord. Terms of rental agreement can then be changed after it expires.
So, basically, leasing a property means finding a tenant for a long-term tenancy while renting it out involves a shorter time period.
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