FAQs: Leases And Rental Agreements

If you are the owner of rental property then it is important you know how to create a fair, legally valid agreement. As well, you need to know what a landlord can expect to happen if he / she or a tenant wishes to break the lease or rental agreement.

Why it is important to have a written lease or rental agreement?

A key document that sets out important issues relating to a tenancy, it is essential to have either a lease or rental agreement for rental properties. Both leases and rental agreements contain the following information

1. Tenancy duration.
2. Monthly rental amount.
3. Names and the number of people allowed to rent the property.
4. Whether a landlord or tenant is responsible for paying the utilities.
5. Whether, the property is to be kept pet free or if a tenant is allowed to keep pets.
6. Whether, sub-letting is permitted.
7. Landlord’s right of entry or access to the rental property.
8. Who is responsible for paying legal costs in the event of a law suit.

Although, most states allow for oral agreements, which may be easy and informal, they can often result in nasty disputes. As any landlord who has had his fingers burnt knows, leases and rental agreements should always be in writing. If there is no written agreement and later on the tenant and landlord disagree about, say for example – sub-letting, the entire matter may end up going to court. A particular problem related to long-term leases has led to courts in some states refusing to enforce oral agreements after the passage of one year.

What differentiates a rental agreement from a lease?

The difference between the two lies in the period of occupancy. A rental agreement provides for short-term tenancies e.g. often 30-days, and is automatically renewed at the end of this period, unless the tenant or landlord end it giving due written notice, usually of 30-days. For these month-to-month rentals (rent is paid monthly), a landlord is allowed to change the agreement terms as long as he / she gives proper written notice, subject to any rent control laws. Again, the notice period is usually 30-days, but if the rent is paid weekly or bi-weekly, it can be shorter in some states, or based on what the landlord and tenant agree to.

On the other hand, a written lease gives a tenant the right of occupation of a rental unit for a set term, which can be either for six months, a year, or longer, as long as the tenant pays the rent and complies with other lease provisions. Unlike a rental agreement, the expiry of a lease does not automatically renew it. If a tenant stays on when a lease expires with the landlord’s consent, he / she is considered to be a month-to-month tenant.

As well, a fixed-term lease does not allow the landlord to raise the rent or change other tenancy terms during the lease duration, unless the changes are specifically provided for in the lease, or the tenant agrees.

If a tenant breaks a long-term lease, what happens then?

Generally, tenants are not allowed to break their lease unless and until a landlord violates its terms i.e. fails to make necessary repairs or fails to comply with important health and safety laws. There are a few states that will allow a tenant to break his / her lease due to health problems or a job that requires him / her to permanently relocate.

If a tenant breaks his / her lease without a valid reason, he / she is held responsible for payment of rent under the lease term. However, most states make it the legal duty of a landlord to find a new tenant as soon as is possible, regardless of the tenant’s reason for breaking the lease.

When is a landlord legally allowed to break a lease and end a tenancy?

If a tenant violates the lease terms or the law i.e. late rental payments, keeps pets, thereby violating the No Pets clause of the lease, damages the property or engages in illegal activities on the leased premises, then a landlord has every right to end the lease without getting on the wrong side of the law.

But, before he / she can do so, a written notice has to be sent to the tenant informing him / her that the tenancy has been terminated, with a warning about vacating the premises or eviction proceedings will be initiated against them. Or else, a landlord can ask the tenant to desist from violating the lease terms, and if the tenant complies and does as he / she is told, there is no issue to go to court.