What Is the Difference between a Lease and a Rental Agreement?

Both documents allow tenants to live on your property for a designated period of time. The main differences are in the duration and end-points.

A lease lasts for a longer period of time, usually for six or twelve months. It also has a definitive end-point, after which the tenant cannot continue living on the property unless they sign a new agreement with the landlord.

A rental agreement lasts for a short period of time based on the rental period (the length of time between rent payments). For example, the most common rental agreement is month-to-month. In this case, the rental agreement is only in effect for one month, but is extended each time a payment is made.

In some states like California, if a landlord accepts rent payment after a lease has terminated, an automatic month-to-month tenancy is created with the same terms of the lease.

For a lease, the terms of the agreement are fixed for the entire term. This means the landlord cannot raise the rent in the middle of the lease, nor can the tenant move out before the lease is up without consequences. Any changes to the lease must be signed by both the landlord and tenants if they are to be legally binding.

For a rental agreement, the terms are only in effect for the duration of the agreement, usually for one month at a time. After this point, the landlord may make changes to the agreement (such as raising the rent), but they must give tenants sufficient notice (usually one rental period is sufficient). Likewise, a tenant must give similar notice if they wish to vacate the property and end the rental agreement.