Are you moving and need to find a new place to live? Or do you need a new car but don’t want to own it? This blog post is going to discuss the difference between lease and rent.
First, I need to explain these two terms as legal documents. So I will treat them as a noun. Later, we are going to see them used as other parts of speech. Just so you know, a legal document can be used in court as evidence.
For purposes of making this easier to understand lease will be referred to as Lease Agreement. The word rent will be referred to as Rental Agreement.
A Lease Agreement is a legal document between the person who owns property (landlord or car dealership or Lessor) and the person who wants to use the property (tenant or Lesse) stating how much payments are and how long they will be paid.
You can think of a lease agreement as a long-term plan that does not need to be re-written every month. Lease agreements can be written for a period of six months or one year or more.
Both parties (people involved in the transaction) agree upon how much will be paid as well as other responsibilities. The lease agreement is signed by both parties and will be valid until the end of the period mentioned in the agreement.
Again, it is like saying I will let you stay in this apartment if you pay $100 per month, every month for 2 years. So you have to stay in the apartment for 2 years. If you want to move out, then you might have to pay a fine (penalty in money).
What happens after 2 years?
Either you re-new the lease agreement or you can move to a different home without paying a penalty in money.
After two years, the landlord, lesser, or person who actually owns the property can change the amount needed to be paid or lease the property to someone else.
Now let’s look at Rental Agreement.
A rental agreement is almost identical to a lease agreement except in terms of duration.
A rental agreement is not a long-term contract. A rental agreement only lasts 30 days to one month and then is renewed after each month.
What does this mean?
This means that both parties can change the terms of the agreement at the end of each month.
The person paying money the property (tenant) may move out without penalty or the person receiving money for the property (landlord) can tell the tenant to move out for someone else to move into the apartment.
What are the benefits in having a lease agreement?
If you are the person paying money for the car or the property, then the lease agreement protects you from changes being made from month to month.
For example, the landlord could INCREASE the amount to be paid. The amount to be paid could be $100 for January and then in February it could be $125. This still could be changed in March to $150 if you only have a RENTAL AGREEMENT.
In a lease agreement the amount cannot be changed or altered until the end of the lease. This could be after 1 or 2 years. So for 2 years you could be paying the same amount and not have to worry if the price was going to change every month.
Let’s go back to the terms lease and rent.
Lease = Lease Agreement
Rent = Rental Agreement
I want to focus on the parts of speech for each of these words.
Starting with Lease it can be a noun. When it is a noun, then we are referring to a legal document (an object or thing). This is the paper document that can be used in court if there is a problem.
Here are some examples:
- I need to review the lease before I sign it.
- The lease needs to be renewed next month.
- I have a ten-year lease on the car.
This word “lease” used as a noun, can also mean the property that is leased.
- I need to go check on the lease to make sure it is in good condition.
Lease can also be used as a verb. In this case we are NOT talking about the paper document. We are talking about the action of allowing someone to use your apartment or car in exchange for money.
- He wants to lease his house to a family member.
- The lawyer advised the new property owner to lease her apartments to people with children.
The word rent when used as a noun refers to the payment that is made during a period (usually every month) in exchange for land or property.
- I need to pay the rent by the 15th every month.
- When is the rent due?
- What is the rent? It is $500 per month.
When the word rent is used as a verb it means to allow someone to use something of yours (like a car or an apartment).
- I have an apartment in New York City that I rent to a nice family.
- I am thinking of renting my car to make some extra money.
- Are you renting this apartment?
Of course how often the document needs to be reviewed will determine if it is called a lease or rent.
Good luck on your new apartment! Leave comments below if this article helped you. Check out our other blog posts on this site as well!