Featured News 2013 Leasing vs. Rental Agreements

Leasing vs. Rental Agreements

Whenever you are involved with real estate matters, hiring a qualified real estate attorney to help you with the legal process is encouraged in order to protect yourself and your property from bad contract agreements. Specifically when dealing with the topic of renting or leasing out your property to other people, having the legal guidance of a lawyer will be extremely helpful in order to help you draft the contracts and make sure that all aspects are addressed before you and the tenants make the official agreement.

When you decide to rent or lease out, you want to make sure that you have a crystal clear contract between you and the tenants in order to protect yourself and your wallet in the future. In today's society, tenants will do whatever they can to shift the blame to a landlord so you want to make sure that you are protected as the law seeks to hold you to a higher standard while at the same time offering the tenants even more rights. Before defining the difference between a lease and a rental agreement, first lets discuss the importance of having one or the other.

A written agreement is going to save you both money and stress in the long run, because while an oral agreement is technically "legally binding" there is slim to no chance in convincing a judge that a tenant claimed something in the past. A written document is an extra level of protection for you and your property and can help avoid disputes in the future. These contracts will discuss every single detail including the rent/lease agreements, late fees, repairs, security deposits, etc.; having these laid out is vital to you being a landlord. This is worthwhile for both you and the tenants and can establish a stronger relationship for the future.

Now to define these two terms. A rental agreement is usually established for a tenant on a month-to-month basis, who perhaps does not plan on staying around for a very long time. In most cases their "contract" is renewed on a monthly basis, and as long as they give you 30 days advance notice they are leaving, there will be no extra charges to their account. As a landlord you also have the ability to adjust the rent or change their terms as long as you also give them a 30 day warning.

A leasing agreement varies slightly, and is often meant for those individuals who plan on sticking around for a lengthier period of time; at least a year in most cases. The big difference with this contract is that you will establish within the contract a set payment, and during the length of your contract you cannot change the rates on them, even if things like property taxes increase on your home. The only way you are able to change details of the contract in the middle of their lease is if they agree ahead of time to certain potential adjustments. As a landlord is it much more binding to have a lease as opposed to a rental agreement, and if a tenant fails to pay you rent it is much more difficult for you to file a lawsuit against them.

So, which is better for you as a landlord: renting or leasing? While your decision ought to be made with your real estate attorney, in many cases landlords often prefer having rental agreements because there is more freedom. Freedom for both the tenants to make a new purchase, and freedom for you as a landlord when the market is tight and you are looking for a person to fill a spot even for just a month. However, if you own property in an area that is more commonly known for having vacancies, then a lease will ensure that your tenants stay put for a longer time period. Discuss your specific situation with your attorney in order to determine the best plan of action for yourself and your properties.

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