Do you need help deciding whether to opt for a lease or rental agreement? The world of property and real estate can be complex at times. However, understanding the key differences between a lease deed and a rental agreement can help you crucially.
The pros and cons of leases and rental agreements may vary but generally involve similar conditions. Let us examine the differences between a lease deed and a rent agreement.
What is a Lease Deed?
A lease deed is a contract between two parties, the lessor and the lessee. The lessor is the property owner who lends the property to the lessee for a particular period. The lessee can use the property for the agreed-upon period.
The period of use in a lease deed is usually longer than in a rental agreement. Lease agreements over 11 months are typically made.
Lease deeds discuss who is responsible for maintaining the property and paying taxes. At the end of the agreed-upon period, both parties must decide whether to renew the lease.
What is a Rental Agreement?
A rental agreement is a landlord and occupant or tenant contract. The landlord rents her or his property to the tenant for a particular sum that should be paid monthly. The renting period can be between 6 months to more than a year, There are Different Types of Rental Properties available
The rental agreement can discuss who is responsible for maintaining the property and paying taxes. At the end of each month, both parties must decide whether to renew the tenancy.
The party wanting to vacate the property must also initiate a notice period based on the rental agreement.
Key Differences Between a Lease Deed and a Rent Agreement
| Lease Deed | Rent Agreement | |
| Meaning | A contract made between two parties regarding using one of the parties’ property for a particular period, which is usually longer in a lease scenario. | A contract made between two parties regarding renting one of the parties’ properties on a month-to-month basis. |
| Terminology | A lease deed addresses the two parties: the lessor and the lessee. The lessor lends the property for use, and the lessee uses it on a contract or an agreement basis. | A rent agreement addresses the landlord and tenant. The landlord rents the property for use, and the tenant uses it on an agreement basis. |
| Duration of Agreement | The duration of the agreement in a lease contract is usually more than 11 months. | The duration of the agreement is generally between 6 months to one year or more than a year. |
| Renewal of the Contract | If both parties wish to proceed with the contract, it can be renewed for another set of duration at the end of the agreed-upon period. | If both parties wish to proceed with the agreement, it can be renewed at the end of the agreed-upon period, usually 6 months to one year or even longer. |
| Maintenance of the Property | The lessee usually pays the charges for the upkeep of the property. | The tenant usually pays the maintenance charges for the property. |
| Taxes to be Paid | The lessor usually pays all applicable taxes to the property. | The landlord generally pays all the taxes applicable to the property. |
| Amendments to the Agreement | Any amendments to the lease deal cannot be done once the agreement is signed. | The landlord can change the contract terms at any time, but she or he must inform the tenant about the changes within an agreed-upon period. |
| Termination of an Agreement | The lessee must pay the agreed-upon sum even if she or he wants to terminate the lease deed before the end of the agreed-upon period. | If the tenant terminates the agreement before the end of the month, she or he must pay any agreed-upon sum. |
| Notice Period | Termination or renewal of the occupation must be notified as per the norms agreed in the lease deal. | Termination or renewal of the tenancy must be notified as per the norms agreed in the agreement. |
| Advance Payment or Security Deposit | The advance payment, if any, must be dealt with as per the agreement upon the termination of the lease agreement. | Upon the termination of the rental agreement, the advance payment, if any, should be dealt with as per the agreement. |
How can a Rent Agreement Qualify as a Lease Agreement?
A rent agreement can be upgraded to a lease agreement if the following conditions are met:
- When the landlord transfers the right to use the property to the tenant for an extended period, for example, more than 11 months, or for infinity.
- The tenant must regularly pay the agreed-upon monthly rent or any other value, such as service, share of crops, and so on, in exchange for transferring the right to use the property to the landlord.
Conclusion
The primary differences between leasing and renting are the duration of the agreement and the time of payment for using the property. Knowing these differences can help you decide whether to lease or rent your property or if to rent or lease the property.
The pros and cons of leasing and renting may differ under different circumstances. You will have to weigh the pros and cons based on your affordability and comfortability before making the choice of renting or leasing.
FAQs
What is the difference between a lease and a rent agreement?
A lease agreement will consist of the terms and conditions for leasing a property, and a rent agreement will consist of the terms and conditions for renting a property. The primary differences between the lease and renting agreements are the conditions for the duration of the agreement and the time of payment for using the property.
Are the lease agreement and lease deed the same?
No, the terms lease agreement and lease deed are not the same. While the lease agreement dictates the terms and conditions for leasing the property, the lease deed talks about how the lease agreement would be executed.
What is the significance of a lease deed?
A lease deed protects the interests of the parties to the lease agreement, the lessor and the lessee, by creating a framework for their working relationship.
Is the lease amount refundable?
The advance payment or security deposit is refundable at the end of a lease agreement, given that no damage has been done to the leased-out property or no standing rent amount.