LEGAL GUIDE
Written by Avvo Staff

What's the difference between a lease agreement and a rental agreement?

Understanding the unique complexities of two different contracts

Choosing a rental or lease agreement will depend on your needs, how long you intend to stay in the area, and whether long-term housing security is a necessary component to your future plans. In any event, both agreements are legally enforceable, and a court will consider the terms binding on both parties in the event of conflict.

Lease agreements

While both rental agreements and lease agreements provide the right to possess property for a certain period of time, only a true lease agreement will bind the landlord in the long-term, while providing peace of mind to the tenant in need of secure housing.

In a lease agreement, a tenant enjoys the security of knowing that the landlord may not rent the property to another tenant at least until the agreement expires. Lease agreements require that tenants receive at least 30 days notice if the landlord does not intend to renew the agreement.

Rental agreements

By contrast, a rental agreement allows for greater flexibility on both sides, but far less security. There are several situations where it might be beneficial for a tenant to secure housing on a weekly or monthly basis instead of a full year, including:

  • Schooling or an internship
  • Searching for or building a new house
  • Moving temporarily for a job assignment
  • Living closer to a ill relative or close friend
  • Visiting a new area or taking a long vacation

However, with this added flexibility comes the option for the landlord to rent the property to others at the end of the rental term, and notice is generally not required. A renter may also be required to vacate a property quickly, often in a matter of days.

Additional differences between a lease and rental agreement can be found below:

Lease agreements vs. rental agreements
  Lease agreement Rental agreement
Legally binding? Yes Yes
Duration? Long-term: 6 months to 10 years Short-term: week-to-week or month-to-month
Amendable? No, not during the lease term. Yes, at the end of the rental period.
Terminable? Yes, upon breach of agreement (damage to property, failure to pay rent). Yes, upon breach of agreement (damage to property, failure to pay rent).
Occupancy limits? Yes Yes
Available for low-income or disability subsidy? Yes No
Accommodations for those with a disability? Yes Varies by property
When is payment due? Every month When the term begins
Can I make changes or improvements to the property? Varies by agreement No
Are pets allowed? Varies by agreement Varies by agreement
Can the landlord enter anytime? Varies by state and individual agreement Varies by state and individual agreement

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