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Which is Better: Lease or Rental Agreement?

September 5, 2019 0 Comment Category: Real Estate

A property owner can spell out all the rules and regulations regarding what is allowed and what not in the building with the help of a written lease or rental agreement. For instance, the landlord can mention in the contract if he/she does not allow pets in the rental unit, and if the tenant breaks the rule, then the property owner can issue a 3-day notice to the resident to abide by the covenant. This means that the tenant should either comply with the terms mentioned in the contract or vacate the apartment. If the tenant ignores the 3-day notice, the landlord can file an Unlawful Detainer to evict him/her for breaching the agreement.

Lease vs. Rental Agreement

According to California Civil Code 718, a lease can be agreed for any period up to 99 years. However, lease agreements are usually signed for a period of 6 months to 3 years. When the lease period expires, the tenant can either vacate the property or renew the lease, if the landlord agrees to that. A lease can also be converted to a month-to-month agreement upon ending if both the parties approve that. A rental agreement, on the other hand, is a short-term contract that normally runs on a month-to-month basis. Therefore, a lease would be better for the long-term, while a rental agreement would best serve people who need to move to places frequently due to their job obligations or any other requirements.

No matter whether you are leasing or renting a property, having a written contract is very important to avoid any renting legal complications in case the tenant violates the terms. Note that where a lease agreement states the terms and conditions for the tenant to reside in the landlord’s property, including the rent amount to be paid by the resident and the period of the lease, a rental agreement just specifies the amount of rent to be paid periodically by the tenant to live there.

A lease runs from 6 months to 3 years for residential properties, but the landlord and tenant can negotiate and sign a contract for any period that is under 99 years. The lease contract is to be written and managed by the property owner, stating all the terms and conditions of living in the rental unit. The tenant, if he/she agrees to the terms and conditions, needs to sign the contract and follow the mentioned stipulations to avoid penalties and possible eviction. As a lease agreement is a legal contract between the parties, any breach to the terms and conditions in the lease can invoke legal action against the party involved.

A rental agreement usually runs month-to-month and focuses on specifying the rent amount the resident needs to pay to live in the property. It is also a legal contract between the landlord and the tenant, but it generally deals with the rental amount, payment period, and method of renting or letting the property. It is to be noted that a rental agreement is applicable to residential properties alone, while a lease can be drafted for a long-term letting of commercial buildings such as warehouses, offices, and shops. A lease agreement can also be used to control the terms and conditions for land renting.

How Lease Agreements Protect Tenants

A lease agreement can protect the tenants too in case a breach of contract happens. For instance, if a property owner sees a better opportunity to lease the building to another party, which would bring him/her more profits, he/she could try to evict the tenant. However, under the California law, landlords are not allowed to evict tenants who follow the terms and conditions mentioned in the written contract. As per the law, the property owner cannot evict a tenant as long as he/she pays the agreed rent in full on time and abides by the stipulations of the lease agreement. If the lease contract is for a 3-year period, the landlord can only ask the resident to vacate the property on the last day of the lease period.

Although a lease agreement can include the penalties to be paid if the tenant fails to pay the rent in full on time, the landlord cannot make any modifications to the terms and conditions after it is signed by the occupying party. There can be a clause included to impose eviction in case the tenant does not pay the rent on time as agreed, but the property owner cannot end the lease without the resident’s consent for any other reason.

All lease contracts should include a specific start date as well as an end date. This allows the landlord and the tenant to negotiate and extend the lease agreement if required. A leasing term can be extended 30 to 90 days before the end of the contract period. Note that the property owner is allowed to change the rent amount or modify the terms and conditions in the new lease agreement. If the tenant does not agree to the amendments, he/she can vacate the property.