As you’re looking for apartments for rent, or possibly renting a house, you’ve undoubtedly seen leases and rental agreements show up on the rental’s listing page or when speaking with the landlord. But is there a difference between a lease and rent agreement? Yes, there is a small difference between the two agreements. We’ll cover what lease and rental agreements are, common types of apartment leases, and the pros and cons so you can choose the right one for you.
As a renter, you’ll often hear the words lease and rent used interchangeably, yet they mean slightly different things when it comes to the legal agreement you sign. Both lease and rent agreements are legally binding agreements outlining the rent price, duration of tenancy, rules, and much more that you and your landlord agree to. However, the main difference lies in the duration of the contract - leases tend to be longer and rent agreements tend to be shorter.
A lease agreement often allows a tenant to live in an apartment for a fixed period of time, typically 6-12 months. Although, this number can vary depending on your area or the apartment lease you sign. Lease agreements cover all your expectations as a renter and the landlord or property manager. This includes rent price, rules and regulations (ex., quiet hours, no-smoking areas, if pets are allowed, and parking spots), and the duration of your lease. A well-written lease agreement is best for both parties and can help prevent issues down the line.
A rental agreement is usually a much shorter agreed-upon contract, typically for about 30 days. Often rent agreements are on a month-to-month basis and may automatically renew at the end of each month unless otherwise agreed upon by the landlord and tenant. This means that you have the option to renew at the end of the month or move somewhere else, so long as you follow the proper notices that you’ll be ending the agreement. However, this can also mean that your landlord may decide to sell the property or sign with a new tenant, meaning you'll have to find a new place quickly.
When renting an apartment or home, there are a couple of common types of leases you may run across, such as:
This is the most common type of lease you’ll find when renting an apartment or house. It’s called a “fixed-term lease” because you agree to rent the apartment or home for a certain period of time - typically 6-12 months. However, some fixed-term leases may be as short as 3 months or as long as 14 months. Once you’ve signed the lease, you’re committed to the lease for that time. The landlord also cannot end your lease, unless legally allowed. You’ll also have a harder time breaking the lease. Fixed-term leases also set a rent price that won’t change during the lease term. Although, if you’re anticipating renewing the lease, you may see your rent increase.
Month-to-month leases are often for 30-day increments. They may automatically renew at the end of the month, although this depends on the agreement. With this type of lease, your landlord may decide to sell the property or choose not to renew your lease at the end of the month, leaving you in need of another rental. Additionally, landlords have the option to increase your rent each month. However, if you’re looking to temporarily live somewhere or want the freedom to move out quickly, this may be the right option.
Subleasing occurs when you rent out some or all of your apartment or rental home without the landlord’s assistance. An example of this is renting out a room in your rental home for a few months, because the tenant is taking over part of the lease. You’re responsible for collecting rent from the sublessor and paying the full rent amount to your landlord each month. Your name will remain on the lease, so any unpaid rent or damage from the subtenant is up to you to cover until the lease officially ends.
Subletting occurs when a tenant leases their rental apartment or home with the permission of their landlord or property manager. Not all landlords allow renters to sublet their place, or they may have strict guidelines for subletting. Landlords may require you to look for someone to sublet the apartment, or they may already have tenants lined up. They’ll also likely have a background check done on the subletter, even if it’s a short-term arrangement. Once the new tenant signs the sublet agreement, you’re no longer responsible for the maintenance or rental costs of the property.
A joint lease is typically what you’ll sign if you’re living with a roommate(s). Assuming you found a good roommate, you’ll sign the contract together, agreeing to the lease term and monthly rent payment. Most commonly, landlords will have a single payment that you and your roommate(s) will need to pay. However, some property managers or landlords may split the costs between parties. Carefully choosing the right roommate(s) can make or break your renting experience, as your landlord may have the right to evict you if your roommate(s) is not contributing to their share of the rent each month.
A co-signer is an additional person included in your lease who agrees to take financial responsibility if you fail to make rental payments. This can be a great option for those leasing and renting with bad credit, no credit history, or if you’ve had a previous eviction, as they can show you’re serious about leasing or renting and reassure your landlord that your rent will be paid. Just make sure you have a reliable co-signer who can pay rent if you’re unable.
The agreement covers lots of important information regarding your rent or lease. It can vary depending on your landlord, the property’s rules, or if you live in a large apartment complex or a rental property. Here are some of the basics you can expect to find in a rental or lease agreement.
The agreement lists your name, contact information, and any other tenants living on the property.
This includes the home or apartment's address and, if applicable, an apartment or unit number. This may also include information about parking spots.
This should clearly state whether you’re entering into a month-to-month rental agreement or a fixed-term lease, including the start and end dates. It should also list any penalties for breaking your lease early. If you’re signing a rental agreement, you may also find information regarding how early you or your landlord must notify you that the rental agreement is going to end.
This section states monthly payments like rent price, the security deposit, and other fees such as a parking pass, which should note if it’s tandem parking or not. It also likely includes when you need to make payment by and the preferred method of payment (check, direct deposit, automatic deposit, etc.).
Your lease or rental agreement may include additional information such as whether overnight guests are allowed, if guests can stay for long periods, or the number of people allowed to live on the property.
This section includes whether pets are allowed, how many, and whether you’ll need an additional deposit for your pet to cover damages or if there is a recurring monthly pet fee.
Does your community have a 24-hour on-site gym, or is there a community pool only available from 9 am until 9 pm? This section should list any extra amenities included and their rules.
In some cases, your landlord or property manager may pay for some or all of the utilities cost. Other times, you may be responsible for all utility payments. This section will typically list out who is expected to pay utility costs and whether it is included in your monthly rent or to be paid separately.
This outlines the situations in which your landlord or property manager can enter the apartment, how many hours or days they have to notify you before entry, or other yearly maintenance you can expect.
You’ll also find a section detailing the process for repair requests, which repairs you’re responsible for, and if there's a specific period of time you can expect management to address the repair(s).
This section lists out what alterations you can make to the property. Are you allowed to use nails in the walls or does management prefer wall adhesives? Can you paint the walls a different color and do you need to paint them back to the original color at the end of your lease?
You’ll also find a list of what is not allowed, such as illegal behavior, disruptive actions, and other activities that would allow your landlord to evict you.
These are just some of the basic items included in your lease. Some contracts may also include information regarding mold, asbestos, or other information that may affect your health or safety. Always make sure the terms you’ve agreed to are in writing and clearly stated in your lease.
There are advantages and disadvantages to signing a lease vs rent agreement. Weighing the pros and cons of leasing and renting can help you choose the right option.
Stability: One of the biggest advantages of leasing is that you’ll have a pre-determined lease period that you’ve agreed to. That means you don’t have to worry about the possibility of having to find a new place at the end of any given month.
Standard rent: With a long-term lease agreement, no matter if the rent in your area increases substantially or not, you won’t see an increase in your rent each month. The rent you agreed to pay in your lease is the rent you’ll continue to pay until the lease term ends.
Inflexible: If you signed your lease in a more expensive rental season like spring or summer and the rents in your area decrease by the time January rolls around, you’ll still be stuck paying the rent you agreed to in the summer. Additionally, if you don’t like the area or want to move to another neighborhood, you have to remain in the lease until it ends.
Consequences to breaking the lease: Once you’ve signed a lease, it’s typically expected that you stay in the lease until it ends. There are often consequences for breaking a lease, especially if it’s just because you don’t want to live there anymore. However, your lease will outline any specific fees or consequences for ending your lease early. Note that there are some legal reasons why you can break a lease early without consequence.
Flexibility: If you’re new to an area, searching for a home to buy, or are deciding how much space you need, a short-term rental agreement provides the flexibility you may be looking for. You have the option to leave your rental at the end of the month rather than leasing for an extended period.
Opportunities to negotiate: Unlike leasing, you may have the option to negotiate at the end of the month - whether that’s asking for a parking spot, bringing a pet into the rental, or other non-monetary benefits.
Uncertainty: Since you’re renewing your rent on a monthly basis your landlord may decide to sell the property or look for another tenant, leaving you to find another place to live on short notice.
Rent increases: With a rental agreement, each month you’re at risk of seeing your rent increase. However, this depends on the rental market in the area and whether rents are on the rise or slowing down.
If you’re renting an apartment or home, either a lease or a rent agreement is likely going to fit your needs. If you’re planning to stay in the area for a while and the place falls into your rental budget, then consider choosing a lease agreement. If you’re unsure of your plans or if you’re considering buying a house or moving soon, then a rent agreement may fit your needs better. Whichever you choose, carefully read the terms outlined in the agreement before signing it.