Every industry has its specific terminology that is used to express the mode of business operability. In real estate too, many terms are used by people to define what business activities they have performed.
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Lease and Rent are the two most common words which are used in this industry. But many people muddle their meaning and treat them the same.
Lease vs Rent
The difference between Lease and Rent is that the Lease is for a longer duration with an authenticated contractual legal agreement, whereas in Renting, the period of occupancy is less. Lease refers to the contractual agreement between two parties where Party A allows Party B to use their property for a specific period with T&C. Rent is a sub-set of Lease only for a short period and involves a regular monthly payment.
|Parameter of Comparison||Lease||Rent|
|Definition||Lease means two parties mutually agree and get into the legal contractual agreement to which both are obligated to abide by for letting and using the particular property with specific terms & conditions.||Rent refers to the mode of payment that is either done under Lease or under a small rental agreement between two parties i.e. Landlord and Tenant for using a property for a small period.|
|Duration||For a longer period ranging from 1 year to 10 years (or even more depending upon the property type).||For a smaller period ranging from 6 months to 11 months.|
|Terms & conditions||Rigid, can’t be changed before the expiration of the agreement.||Flexible can be changed before the expiration of the agreement.|
|Naming Convention||Party A whom the property belongs to is called Lessor and Party B who takes the property for use is called Lessee.||Party A whom the property belongs to is called Landlord and Party B who takes the property for use is called Tenant.|
|Extension of Agreement||No, a new legal agreement will be required.||Yes, can be extended with the same terms & conditions.|
What is Lease?
Lease refers to the legal contractual agreement between two parties known as Lessor and Lessee. Here Lessor allows the lessee to use his/her property for a specific time and receive lease rental in exchange for that.
It is a formal legal document with specific terms and conditions that both Lessor and Lessee are obligated to abide by else it will have a negative impact.
It is generally done for a longer period i.e. from 1 to 10 years.
This agreement stipulates certain duties concerning the usage of the property to Lessee.
The lease gives the right or allow the lessee to use of an asset for personal or commercial purposes as described in terms & conditions, and guarantees the Lessor, the property owner, to receive the regular payments as rentals for a specified period in exchange of the property use.
Terms & conditions of the Lease are rigid that can’t be changed for the specified period, and if any party does so then they need to face the legal consequences.
Intimation of extension of the agreement is done 60-90 days before the expiration of the lease agreement.
What is Rent?
Rent is a sub-set of Lease. It is also a contractual agreement between two parties known as Landlord and Tenant but with limited legal obligations.
Here Landlord, the property owner, allows the Tenant to use his/her property for a smaller period in exchange for a certain amount every month, which is called a Rent.
Time duration in agreement range from 6 months to 11 months in this case.
Terms & conditions are flexible and are only defined in terms of property use. If any parties do not oblige to the specified terms & conditions, then the first step to resolving such issue is the mutual talk and if this fails then only legal action is initiated.
Tenant is responsible for maintaining the property. Intimation of extension of the agreement is done 30 days before the expiration of the rental agreement.
Main Differences Between Lease and Rent
Any legal contractual agreement comes with certain responsibilities to both parties, where they need to abide by them.
Lease and Rent are essential characters in the real estate world, where both define how the business will be conducted or operated.
Both, Lease and Rent, have their own characteristics and applications, thus it is important to understand the difference between them.
- Lease a proper legal contractual agreement between Lessor and Lessee, where Lessor allows the Lessee to use his/her property for a longer duration, whereas in renting the landlord, owner of the property, allows the tenant to use the property for a smaller duration.
- The lease is done for at least 1 to 10 years, whereas renting is done for 6 months to 11 months.
- Terms & conditions are rigid in Lease and can’t be modified for the period of the agreement, whereas terms & conditions are flexible in Renting.
- A rental agreement can be renewed with mutual understanding but in case of Lease again new contractual agreement needs to be made between the involved parties.
- In the lease, the maintenance of the property is done by the Lessor or owner of the property, whereas in Renting, the maintenance is the responsibility of the tenant i.e. who uses or occupies the property.
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