What's the Difference Between a Lease and a Rental Agreement?

Wondering what the heck the difference is between a lease and a rental agreement? You're not the only one! Our friends at Trulia break it down. Check it out below.


As a landlord, I often field questions from tenants whose life plans don't fit neatly into 12-month leasing cycles.

The tenant might be in town for a six-month internship or a nine-month certificate program. She might be waiting for a work transfer to another city, but she's not sure when she'll need to move. Or he might be in the middle of house-hunting: he needs to live somewhere until he's ready to buy, but he doesn't want the commitment of a full year.

Generally, I prefer 12-month leases. But depending on the overall market demand at the moment (in other words, how easily could I find a tenant willing to sign a 12-month lease?), I'll sometimes allow a prospective tenant to get on a month-to-month rental agreement.

What's the difference?

A lease gives the tenant the right to live in a dwelling for a fixed time period — usually 12 months, but it could be any length of time ranging from three months to 24-plus months.

Through a lease, the landlord and tenant mutually agree to fixed terms and conditions, such as the rent, rules regarding pets, duration of the agreement, etc. Neither party can change the agreement without written consent from the other.

The lease is mutually beneficial. A tenant can't stop paying rent or vacate the property during the lease term — this is a violation of the agreement. Likewise, the landlord can't arbitrarily force the tenant to move. If my sister moves to town, for instance, I can't evict one of my tenants for the sake of giving that space to a family member. The tenant has secured it with a lease. My hands are tied.

A rental agreement, by contrast, is a month-to-month agreement. At the end of each 30-day period, the landlord and tenant are both free to change the terms.

The landlord can raise the rent, decide to offer the space to someone else or enact a "no-pet" policy. Likewise, the tenant can decide to pack her bags and move elsewhere.

Rental agreements usually renew automatically at the end of each 30-day period unless either party gives the other "proper notice," as defined by the terms of the agreement and by local laws (for example, 30 days' notice, 60 days' notice, etc.).

Rental agreements give both parties the freedom to enjoy a month-to-month living arrangement. A tenant can enjoy the freedom of living somewhere for only one or two months. Likewise, a landlord might only need tenant occupancy for a few months before starting renovations in the springtime.

One caveat: Every state, county and municipality has different laws governing leases and rental agreements. Some localities carry "rent control" laws; others don't. Some localities allow each party to give the other 30 days' notice during a month-to-month arrangement; others require more advance warning.

A lease offers more long-term security to both parties. A rental agreement offers more flexibility. Leases are great for tenants who want to establish a "home." Rental agreements are ideal for someone who needs temporary shelter during a transitional time.

Check out more great stories from Trulia:

Should I Rent or Buy?
Is Renting Really Cheaper Than Buying?
Reasons Why You Might Love Renting