A bit of legal research became necessary due to a potential condo buyer for one of the association's units, who wishes to have two roommates paying for the privilege of occupancy. Our by-laws discuss "leasing" and "renting" as separate legal terms. Why?
"When you rent out a property, you will need to decide if you wish to offer your tenants a lease or a rental agreement. Although these terms are often used interchangeably, they are not the same.
A lease for a rental property has a finite term, such as six months or a year, for which a tenant will agree to rent the property. During this time period, also known as the duration of the lease, the tenant and the landlord are bound to uphold the terms of the written agreement.
Having a lease means that neither party may change any terms of the agreement until the lease expires, unless both parties agree to the change. For example, if the current amount of rent is $500 per month, you may not increase this amount until the lease expires.
Under a lease, tenants are obligated to make monthly rent payments as agreed upon, as well as follow any code of conduct or other stipulations in the lease while it's in effect. It also means that a tenant may not vacate the property without breaking their lease. In some cases, the tenant may be held liable for the remaining amount of rent due under the lease, or they may be required to find another person to fulfill their end of the lease.
A lease is generally used for landlords who prefer the stability that comes with locking in a tenant for a specified period of time. If you have a mortgage payment to meet, having this set amount of income can help you budget your expenses. Most tenants are familiar with long-term leases, and will not have a problem committing.
Rental agreements differ from leases in a number of ways. Standard rental agreements are month-to-month, and there is no set period of residence. Both the landlord and tenant are free at the end of each 30-day period to make changes to the rental agreement, subject to any rent control laws.
These changes may include a rent increase, modification of terms of the rental agreement, or a request to vacate the property. However, in most states, both landlord and tenant are required to give 30 days' notice before any changes can be made. If your state does not require a notice, you are free to change any part of the rental agreement at your discretion.
Rental agreements are useful for landlords who are having difficulty attracting new tenants, especially if they are in areas that cater to students or professionals on the move. They appreciate the freedom a month-to-month agreement provides, and landlords who offer these arrangements may have an edge over landlords who require long-term leases.
A rental agreement is typically auto-renewed without notice after each 30-day period has elapsed, as long as neither party has stated that the tenant will vacate the premises.
Before you rent out your property, you will need to take into account the differences between a lease and a rental agreement. This will allow you to make the best decision for your needs."
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