What Is the Difference Between a Lease Agreement & a Rental Agreement?

Written by chuck hinson
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What Is the Difference Between a Lease Agreement & a Rental Agreement?
Renting an apartment, house or condo is different from leasing one. (block of apartments image by leafy from Fotolia.com)

If you own property and decide to rent it, you can offer your prospective tenant either a rental or lease agreement. There are differences between the two agreement types.

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While a rental agreement can specify payments and tenancy on a monthly basis, a lease agreement commits the tenant to a specific term of occupancy. These terms can require six months' to a year's commitment by the tenant.


While rental agreements are often automatically renewed at the end of the month, a lease agreement usually does not. The agreement must be discussed between the tenant and landlord and renewed with the landlord's approval.

Rent Increases

While landlords of monthly rentals are allowed to raise the rent of their property with prior notice, those who lease property cannot raise that property's rent during the lease's term.

Oral vs. Written Agreements

Both rental and, occasionally, lease agreements can be oral, which can be legally binding. However, they are harder to prove in court should a dispute arise between landlord and tenant. Since leases are for longer terms than rental agreements, they are more often written agreements.

Breaking the Agreement

Since a lease's terms are for a specific number of months and are usually outlined in a written, mutually signed contract, the tenant cannot break the lease by vacating the property during the length of the contract. If he does so, he can be legally held liable for the amount of rent remaining on the contract. If a tenant decides to vacate rental property, he normally only needs to give the landlord advance notice.

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