“Learn The Key Facts About The Lease Rent Agreement”
Lease and rent agreement may seem exactly the same… but do you know that they are completely different from each other?
There is a difference that can have a direct impact on your property management business.
In this article we’ll focus on the lease agreement, and compare it to the rental agreement. That will help you decide what kind of agreement you should offer to your tenants.
Increase Your Knowledge About Lease Rent Agreement
When renting to a new tenant it is common to have them sign a rental contract or lease agreement that details the terms of rental and anything to do with vacating the unit at the end of the rental term. As the owner or manager of a rental property, you have the choice to offer a lease or rental agreement to your tenant. A rental agreement or contract varies greatly from a traditional lease agreement. Depending on your preference both can work as excellent tools for defining the terms for your tenants renting your properties. Even if it may seem the same, these two agreements have huge differences.
To begin to understand the difference between a lease agreement and a rental agreement, let’s discuss the lease agreement first.
Lease Rent Agreement
If you choose to offer a lease agreement for your tenants rental then you are offering a contract that will only last for a definite period of time. Usually, a lease agreement lasts for 12 months or more. This type of agreement is very specific about the details during the tenant’s stay in the property.
Lease Rent Agreement Terms
Each of the responsibilities of both the tenant and the property manager must be specified in the terms of the lease agreement. For example, the tenant’ responsibility might include keeping the rented property clean or repairing any damage to the property.
Often the lease agreement specifies the person who will shoulder the cost of repainting, cleaning, or maintaining various utilities in the rented property is also specified.
Anything that is included in the lease agreement can’t be changed once the property manager and the tenant have signed the contract. The length of the residency and the amount of monthly rent are some of the unchangeable agreements in a lease contract.
Benefits of Lease Rent Agreement
This type of agreement gives benefits to both sides. Since the amount of rent is already fixed, the tenant is assured that their rent will not increase during the lease term.
The property manager major benefit of a lease is that the tenant cannot just leave the property because an exact length of residency is specified in their contract.
Lease Rent Agreement Renewal
If the lease agreement is over but the tenant still wants to stay in the property, both parties must make a new lease agreement to renew the contract. It is common for rental terms to become month to month until a new lease is agreed to. When making a new lease agreement, the property manager has the right to increase the amount of rent but the tenant must agree to this to make it effective.
Unlike lease agreement, a rental agreement is made for short-term tenancies. The contract of a rental agreement often lasts for months. The terms of a rental agreement can be changed by either the property manager or the tenant.
End Of Rental Agreement Term
At the end of each 30-day period, both the property manager and the tenant are free to change the rental agreement (subject to any rent control laws if they are applicable in your local area).
Changes may include:
- Raising the rent
- Changing the terms of the initial agreement
- Asking the tenant to vacate the property
Who The Rental Agreement For
The rental type of agreement is often offered to students or professionals because it can be modified to suit their budgets.
Since the rental agreement gives more freedom to the tenant regarding their responsibilities it attracts many prospective tenants and with rents paid monthly, the tenant turnover can be high and costly. This is beneficial for those property managers who are struggling with attracting potential tenants to their property as they can get tenants to pay monthly while attempting to find long-term tenants.
If a property manager decides to end the agreement a 30-day notice must be issued to avoid any violation of any rental laws.
Advantages And Disadvantages
Both lease agreement and the rental agreement have different advantages and disadvantages. Both can bring positive and negative effects to your business. It is important that you carefully choose the type of agreement for each of your tenants.
Advantages and Disadvantages of Lease Agreement
The advantages and disadvantages of the lease rent agreement include:
- It guarantees a long-term income for landlords or property managers.
- The rental fees and length of the lease cannot be changed even if property or rent values rise.
If you’re the property manager, lease agreements are the perfect contract to offer if you want to have a stable long-term income. This agreement obliges your tenants to stay in your property for a long period of time. However, you are not allowed to increase the amount of their rent even if the property or rent value is rising.
Advantages and Disadvantages of Rent Agreement
The advantages and disadvantages of Rent Agreement include:
- Property managers or landlords can renegotiate the terms of the agreement monthly and can ask for higher rental fees in the following months.
- Tenants can stay as long they want or can leave after a month if the tenant doesn’t like to stay on the property anymore.
This type of agreement could increase your revenue. Property managers can increase the amount of the tenant’s rent during the contract’s renegotiation. This is caused by the terms that are often changeable after every 30-day period.
So unlike lease agreements, rental agreements are made for short-term renters. This will give the property managers the ability to make use of the properties that are not appropriate for long-term renters. However, it can’t guarantee or secures a stable revenue because your tenant can leave the property whenever they want to.
Whatever type of agreement that you choose to offer, it is still advisable to consult a rental lawyer and make sure the contract signed is complete and legal.
Final Thoughts About Lease Rent Agreement
In this article, we talked about what you need to know about the differences between lease and rent agreements. That will help you decide what is best for your rental properties. Pick the best option to fit your upcoming rental needs.
Comment below with any questions or comments you may have.
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