What are the two types of rental contracts?

Most rental contracts are of short duration, such as month-to-month leases, while lease contracts are usually of longer duration, such as six months, a year or more. This type of lease, also known as a periodic lease, is automatically renewed after a certain duration. For example, such leases may automatically renew every month, every six months or every year. These leases continue until the tenant or landlord gives proper notice to terminate the lease.

The terms "lease" and "rental agreement" are often used interchangeably to mean the same thing. But the terms may 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 agreement. According to the Joint Center for Housing Studies, more than one third of households in the United States live in rental housing. A lease should define the conditions and terms of a tenancy, including the obligations and rights of both the tenant and the landlord. Once you understand the basic types of rental agreements, you will be on your way to understanding how to read your lease and become an informed and educated tenant.

Many landlords prefer leases because they are structured for stable, long-term occupancy. A tenant seeking 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. 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. As this type of lease is automatically renewed every month, landlords also have the right to increase the rental price in any month.

This type of agreement gives the tenant the option to buy the property when the lease ends. Landlords receive a rental credit report, a criminal report, an eviction report, an Income Insights report and a ResidentScore to help them make an informed lease decision, either long or short term. This type of lease is established when the tenant takes possession of a unit with the landlord's permission, but without specifying how long they will stay or whether they will pay rent. Unlike a long-term lease, a rental agreement provides a tenancy for a shorter period of time, usually 30 days.

In most cases, rental agreements are considered "month-to-month" and are automatically renewed at the end of each time period (month), unless the tenant or landlord indicates otherwise. If you rent a room in your property and want to set specific boundaries and rules, you can opt for a room rental agreement. If you have a joint tenancy agreement with a person you trust, it can help build your credit score and rental history. 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.

Due to the short duration of a lease, they allow much more flexibility when it comes to increasing the rent.

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