Types of Rental Lease Agreement
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Many people know what a rental lease agreement is, but don’t really understand one. They know that it is a contract between a landlord and a tenant, and that you need to sign one before renting an apartment, house, or even a commercial property.
While there are three or four different kinds of lease agreements, many landlords use two that are the most popular, the Periodic Tenancy agreement, and the Fixed Term Lease.
The Periodic rental lease agreement is mainly for people who don’t want a long term contract. There are weekly, monthly, and annual agreements. Weekly and monthly agreements are becoming more and more popular with landlords, because if there is a problem with a tenant, then they don’t have to wait a long period of time to get them out.
It has both benefits, as well as drawbacks. It does give the landlord more time to screen tenants before getting stuck in a long term lease, because it doesn’t have a set time for renewal.
This also works well for tenants as well, because if they find a landlord that they don’t like, they aren’t stuck in a long term commitment. Depending on your local real estate laws, with these short term agreements, you can give your tenant or landlord under sixty days notice of your intentions to vacate.
This is also a disadvantage because landlords will suffer losses if they can’t find someone to move in in time.
Fixed term rental lease agreements are for much longer terms, usually a year or even more, depending on the case. Some landlords do the periodic agreement, until they find a really good tenant, and then offer these lease agreements.
These too, have benefits and drawbacks. They can be beneficial for both landlords as well as tenants, because the landlord doesn’t have to worry about finding someone to rent to.
Long term agreements usually have longer vacancy procedures, giving them extra time to fill the rental. For tenants, these long term contracts give them the peace of mind that they are going to be there for awhile, and they can settle in.
The disadvantage is that if the tenant fails to pay the rent, or starts to trash the place, you have a harder time getting them out. If a tenant finds something better, or wants to buy instead of rent, they are locked into the contract, and run the risk of early termination penalties.
The third way to go is the tenancy at will rental lease agreements. Not a lot of landlords use these, because they are more of a verbal agreement, instead of a written contract, but they can be an advantage if you want to quickly rent out your space.
Because there is not written contract, you can evict someone by just giving them a verbal notice within thirty days for just about any reason. This is all right if your tenants are staying just a short period of time, you have someone that you can trust, or as a temporary solution while working out a written agreement, so you don’t lose a potential renter.
If you are not sure on what type of lease agreement to use then please read this excellent handbook which gives hands on advice on Leases & Rental Agreements.
