All about Leasing
Before moving into a property you will be required to sign some contractual agreement. In most real estate scenarios this is a lease. You as the lessee agree to pay the leaser a certain amount of money for using their property.
A lease is a contractually binding agreement between two or more parties. In real estate, this contract is usually between a landlord, or property owner, and a tenant, person who rents the property. The lessee (tenant) agrees to pay the lessor (landlord) for use of a tangible asset (apartment, or property) for an amount of time agreed upon in the lease terms.
Common Examples of Tangible Property That Can be Leased in Real Estate:
- Residential (apartment or home)
- Commercial (retail or office)
- Industrial (warehouse)
- Advertising Space (bulletin board)
- Space on a roof or property (for cell phone towers)
Common Examples of Tenants:
Individual looking to live in residential rental space.
A retail store looking for space to operate their business.
One type of lease does not serve all purposes thus the existence of several other types of leases. It all depends on the agreement between the tenant and the landlord.
Types of Leases
A non-freehold estate is an interest in real property that is less than a freehold estate. It is created through a lease or rental agreement that can be either written or oral. The landlord maintains ownership of the property, and the tenant has the right to use the property as established in the terms of the lease or rental agreement. Non-freehold estates involve tenants, and they are often referred to as tenancies. There are four types of tenancies:
- Tenancy for Years
A tenancy for years is a type of lease that specifies a definite term for the agreement, such as one month or one year. The lease terminates automatically at the specified end date without the need for notice by either the landlord or tenant.
- Tenancy from Period to Period
A tenancy from period to period is a type of lease that specifies a definite initial time but that is automatically renewable unless terminated by either the landlord or tenant. The lease could be from week to week, month to month or year to year, and is renewable indefinitely for a like period of time.
When a person reads the description of a lease they are bound to wonder what is the difference between a lease and a rental agreement. It is all about the time period and some other factors.
What’s the difference between a rental agreement and a lease?
A rental agreement provides for a tenancy of a short period (often 30 days) that is automatically renewed at the end of the period unless the tenant or landlord ends it by giving written notice. For these month-to-month rentals, the landlord can change the terms of the agreement with proper written notice.
A written lease, on the other hand, gives a renter the right to occupy a rental unit for a set term — most often for six months or a year but sometimes longer — as long as the tenant pays the rent and complies with other lease provisions. The landlord cannot raise the rent or change other terms of the tenancy during the lease, unless the tenant agrees.
Unlike a rental agreement, when a lease expires it does not usually automatically renew itself. A tenant who stays on with the landlord’s consent after a lease ends becomes a month-to-month tenant, subject to the rental terms that were in the lease.