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.
Lease and Rent are the two most common words used in this industry. But many people muddle their meanings and treat them the same.
Key Takeaways
- A lease is a contractual agreement between a landlord and a tenant for a fixed period.
- Rent refers to the payment made by the tenant to the landlord for the use of a property.
- Lease agreements typically have longer durations than rental agreements.
Lease vs Rent
A lease is a contract between a landlord and a tenant for the use of a property for a set period of time, usually with specific terms and conditions. Rent is a periodic payment made for the use of a property, it is more flexible and only applies for a short period of time.
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Comparison Table
| Parameter of Comparison | Lease | Rent |
|---|---|---|
| Definition | A lease means two parties mutually agree and get into a legal, contractual agreement that both must 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 more extended 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 and can’t be changed before the expiration of the agreement. | Flexible can be changed before the expiration of the agreement. |
| Naming Convention | Party A, to whom the property belongs, is called Lessor, and Party B, who takes the property for use, is called Lessee. | Party A, to whom the property belongs, 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, it 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 a 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 more extended period, i.e. from 1 to 10 years.
This agreement stipulates specific duties concerning the usage of the property to the Lessee.
The lease gives the right or allows the lessee to use an asset for personal or commercial purposes as described in terms & conditions and guarantees the Lessor, the property owner, to receive regular rentals for a specified period in exchange for the property use.
The terms & conditions of the Lease are rigid that can’t be changed for the specified period, and if any party does so, 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 a 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 Rent.
The time duration in the agreement ranges 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 mutual talk, and if this fails, then only legal action is initiated.
The 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 specific responsibilities to both parties, which 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 essential to understand the difference between them.
- A lease is a proper legal, contractual agreement between the Lessor and Lessee, where the Lessor allows the Lessee to use his/her property for a longer duration. In contrast, in renting, the landlord, the property owner, 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 to 11 months.
- Terms & conditions are rigid in Lease and can’t be modified for the agreement period, whereas terms & conditions are flexible in Renting.
- A rental agreement can be renewed with mutual understanding, but in the case of a Lease, a new contractual agreement must be made between the involved parties.
- In the lease, the property is maintained by the Lessor or owner. In contrast, in Renting, the maintenance is the tenant’s responsibility, i.e. who uses or occupies the property.
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Emma Smith holds an MA degree in English from Irvine Valley College. She has been a Journalist since 2002, writing articles on the English language, Sports, and Law. Read more about me on her bio page.
