The three most common types of leases are gross, net and modified gross. Gross leases tend to favour the tenant. The net lease, however, tends to favour the landlord. Also known as a periodic lease, this type of lease is automatically renewed after a fixed term.
For example, such leases can be automatically renewed every month, every six months or every year. These leases continue until the tenant or landlord gives notice to terminate the lease. A fixed-term tenancy is a rental agreement that ends on a specific date. Normally, fixed-term leases last for one year, so, for example, a lease that starts on 1 September would end on 31 August of the following year.
However, fixed-term leases can be as short as one month or as long as five or ten years (although normally only commercial leases are of this duration). A periodic tenancy ends when either the tenant or the landlord notifies the other person that they wish to terminate the lease. Normally, at least one month's notice must be given for month-to-month leases, although the exact requirements vary depending on state law. A tenancy with right of abatement occurs when a tenant stays beyond the expiration date of their lease, either the end date of a fixed-term lease or the date stated in the notice of termination of a periodic tenancy.
Until the landlord decides to treat the tenant as a trespasser and evict him or her, or to agree to continue paying rent and create a new month-to-month lease, the tenant is considered a tenant at will, or a tenant with the right to chafe. A tenancy at will is a type of informal agreement between the tenant and the landlord. This type of tenancy is established when the tenant takes possession of a unit with the landlord's permission, but without specifying how long the tenant will stay or whether the tenant will pay rent. As soon as rent payments are agreed upon, a tenancy-at-will usually becomes a periodic lease.
A net lease has a fixed rental price that only covers the rent, and the additional costs of ownership are not included in that rate but are billed separately. The rental price is lower than that of a gross lease, but tenants have to pay monthly fees for things like property tax, insurance and any maintenance work. Although the monthly price of a gross lease may be higher than a net lease, you can budget more easily because the monthly bill is the same. A net lease costs less, and you pay for things as you need them.
For example, in a gross lease, you pay for maintenance, whether you use it or not, because the price of maintenance is included in the rent. In a net lease, that is not factored into the rent. If you do not need to make a maintenance request, you will not be charged. Fixed-term contracts are ideal for those who know they are going to stay in the same place for a period of time.
They also offer security because the rent does not fluctuate from month to month, and you do not have to worry about the landlord not renewing your lease as you would with a month-to-month lease. The main problem with fixed-term contracts is that they are almost impossible to break without penalty. If you find that you have to move out before the end date of the lease, it can be quite expensive. Sometimes landlords allow you to pay a few months' rent to break the lease, and some may allow you to find a sub-tenant, but in most cases, breaking a fixed-term lease is not easy.
There are different types of leases, but the most common are the absolute net lease, the triple net lease, the modified gross lease and the full service lease. Tenants and landlords should fully understand them before signing a lease. Often, the terms "lease" and "rental agreement" are used interchangeably to mean the same thing. But the terms can refer to two different types of agreements.
Both rental and lease agreements are legally binding contracts. But each has a very different purpose. Below we will review the main differences between a lease and a rental contract. More than one-third of US households live in rental housing, according to the Joint Center for Housing Studies.
A lease can be a good option for landlords who focus on flexibility, especially in areas where there is a rapid turnover of tenants, such as university towns. That said, once a lease is signed, the cost of the lease is immovable until the end of the agreement. Because there are so many complexities in choosing the right type of lease for your particular situation, it is important to work with an experienced lease lawyer who can help you create a lease that offers the right protections. A lease should include some basic information, although many leases go into more detail.
If you have a joint lease with a person you trust, it can help build your credit score and rental history. A tenant looking for a long-term lease may be put off by the flexibility of a month-to-month lease, which may leave them subject to frequent rent increases or indefinite rental periods. In most cases, leases are considered "month-to-month", and are automatically renewed at the end of each period (month), unless the tenant or landlord indicates otherwise. When drafting your lease or rental agreement, always be sure to comply with state and federal laws.
These types of agreements are useful for putting in writing how you plan to divide utility and rent payments, as well as any rules for visiting guests. Technically speaking, the rent can be revised each month with a rental agreement to keep in line with the current fair market rent, as long as rent increases comply with local law and the notice provisions governing the month-to-month rent. In addition, if your rental is located in an area with a lower occupancy rate, you may have trouble keeping your unit rented for long periods of time. Some categories refer to the length of the agreement, while others describe the type of property rented.
Individuals use these types of agreements to rent a property for a short period of time, most commonly the property is used as a holiday rental. As a landlord, you are often expected to know everything, whether you manage properties and rentals on a full-time basis or rent out a single property as a supplementary form of income. Verbal rental agreements are legal in Washington State and are considered month-to-month leases.