Rental Agreement: Definition, Key Terms, Differences
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What Is a Rental Agreement?
A rental agreement is a legal document describing the arrangement between the owner of real estate and another party who will pay rent in exchange for permission to occupy the property.
The owner of the real estate is also known as a "landlord" or "lessor." The party paying rent is known as a "tenant" or "lessee."
This type of agreement is a contract documenting the use of a space, either residential or commercial, for a fixed period of time in exchange for rent. The landlord and tenant can negotiate the terms of this contract. Once both parties sign the agreement, however, it is considered legally and mutually binding.
You may also encounter a rental agreement referred to as the following:
- Apartment lease
- House rental agreement
- Lease agreement
- Lease form
- Rental contract
- Rental lease agreement
What Is the Difference Between a Rental Agreement and a Lease Agreement?
Although the terms are often used interchangeably, a rental agreement and lease agreement can legally refer to distinct types of agreement documents. Both rental agreements and leases are legally binding contracts between a landlord and a tenant or tenants.
A rental agreement has the following characteristics:
- A rental agreement is usually month to month.
- Landlords can make changes to the rules of the property and rent, provided they give their tenants proper notice.
- Notice of changes must typically come 30 days in advance, although the required amount of time can vary among states.
A lease agreement has the following characteristics:
- A lease agreement states the amount of rent due for a specific amount of time.
- A landlord cannot make changes to the property rules or rent during the rental time.
- If landlords decide to make changes to the lease agreement terms, they must wait until the lease has expired to renegotiate new terms for the lease.
The biggest difference between a rental agreement and a lease is the period of time these documents typically cover. A lease generally covers a longer period of time, for example, six months or 12 months. A rental agreement covers a shorter period of residency, usually 30 days.
Lease Agreement Templates
Terms to Include in a Rental Agreement
Whether you are creating a rental agreement for an apartment, home, or room, you should include certain terms in your agreement.
Names of All Parties
A rental agreement should list all parties to the agreement in the document, making sure to include all adult tenants. A rental agreement should list the landlord and main tenant as well as all other adults occupying the premises.
Including all names ensures that:
- All adults living in the rental property are responsible for obligations and duties outlined in the agreement, including paying rent.
- The landlord can terminate the agreement if any tenant violates the terms of the agreement.
If only one tenant is listed, the landlord has fewer options if one of the other occupants violates an important term of the agreement.
Term of Tenancy
This clause should describe whether the rental agreement is a month-to-month agreement (carrying over each month unless the tenant or landlord terminates the agreement) or whether it is a lease agreement covering a fixed term (typically for a year with the option for renewal upon expiry of the initial fixed period). The rental agreement should also address options for termination.
Rent
The rental agreement should include provisions for:
- The amount of rent
- When the rent payments are due
- When a rent payment is considered late
- How rent payments should be made
- What payment methods are accepted
- What happens if a rent payment is late or if a rent check bounces
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Security Deposit and Other Fees
Security deposits can become a contentious issue between a landlord and tenant. The rental agreement should make all matters pertaining to the security deposit clear to avoid future disputes. The rental agreement should state:
- The amount of the security deposit
- When and how a landlord can use a deposit
- When and how the landlord will return the deposit
- Other fees that can be deducted from the security deposit, such as repair or cleaning fees
States may set specific requirements with which landlords must comply in terms of security deposits. Landlords should consult with state laws to ensure the terms of the rental agreement are valid.
Repairs and Maintenance
Both the landlord and tenant(s) should have their maintenance obligations set in the terms of the rental agreement. For example, tenants may be responsible for:
- Maintaining a clean premises
- Any damages they cause
- Informing the landlord of any repairs that need to be made for which the landlord is responsible
Alteration and Damage to the Property
The rental agreement should state who is responsible if damages to the property occur. The agreement should also set out what, if any, types of alterations a tenant may make to the property, as well as when a landlord must approve or grant permission to a tenant to perform an alteration.
Occupancy or Subleasing
If the landlord has limits on occupancy or subleasing possibilities, the rental agreement should define these terms. A landlord can place limits stipulating that only those who sign the lease and their minor children can live in the rental property. A landlord can also prevent a tenant from subleasing the property without prior approval.
Pets
The rental agreement should clearly state whether pets are permitted on the property. If the agreement allows pets, the document should describe:
- The maximum number of pets allowed
- Any restrictions to the types of pets allowed, for example, small dogs weighing less than 50 pounds
- The tenant's responsibility to keep the premises clean
Right of Entry
A rental agreement should specify the conditions that allow a landlord to enter a rental property. The agreement should also state what notice is required before the landlord can enter. State laws often regulate a landlord's right of entry, and provisions in the rental agreement should align with the legal requirements of a state.
Illegal Activities and Disruptive Behavior
The rental agreement should clearly state what constitutes illegal activities, such as dealing drugs, as well as what is considered disruptive behavior, such as excessive noise). The agreement should also prohibit such activities and behavior, stating that these activities and behaviors would be grounds for termination of the agreement.
Other Rules and Regulations
A rental agreement can cover other expectations for the tenant's behavior, including the following:
- Whether smoking is allowed
- Whether overnight guests are allowed
- If overnight guests are allowed, how long they can stay at the property
Severability Clause
A severability clause will allow the rest of the rental agreement to remain in place if one particular clause is illegal, for example, because it doesn't comply with state laws for rental property.
Image via Flickr by hearingpocket
Local and State Laws
Before writing a rental agreement, landlords should consult with local and state laws to make sure that all included provisions comply with legal requirements. Local and state laws can regulate aspects such as subleases, notice requirements, and how a landlord can deal with a property if a tenant leaves without paying rent. These laws may vary from location to location.
If you are a landlord preparing to rent a property, a rental agreement can provide important protections. When you're drafting a rental agreement, consult with a lawyer to ensure your document covers all necessary aspects.
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Hi, I'm Randy, and I've been practicing law for over 30 years with a genuine passion for contracts and legal drafting. I spent nearly 15 years running my own solo practice in Richmond, Virginia, where I built a thriving firm helping everyone from small business owners to entertainment professionals navigate their legal needs. Those years taught me that great contracts aren't just about covering all the bases legally - they're about understanding what my clients actually need and translating that into clear, enforceable agreements. My sweet spot is contract drafting across a wide range of areas. I've written hundreds of LLC operating agreements (both single and multi-member), prenuptial and postnuptial agreements, residential and commercial leases, independent contractor agreements, service contracts, NDAs, consulting agreements, and corporate formation documents. I also have extensive experience in estate planning documents - wills, trusts, powers of attorney, and living wills - plus employment agreements and entertainment law contracts. These days I'm based in New York City, but I work with clients nationwide on contract matters. What I love most about this work is taking complex business relationships and turning them into documents that actually make sense and protect everyone involved. Whether you're a startup founder needing your first operating agreement or an established business updating your contractor templates, I focus on creating contracts that work in the real world, not just on paper. After three decades of practice, I still get excited about a well-crafted contract. Let's talk about how I can help with yours.
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I am an attorney licensed in both California and Mexico. I offer a unique blend of 14 years of legal expertise that bridges the gap between diverse legal landscapes. My background is enriched by significant roles as in-house counsel for global powerhouses such as Anheuser-Busch, Campari Group, and Grupo Lala, alongside contributions to Tier 1 law firms. I specialize in navigating the complexities of two pivotal areas: AI/Tech Innovation: With a profound grasp of both cutting-edge transformer models and foundational machine learning technologies, I am your go-to advisor for integrating these advancements into your business. Whether it's B2B or B2C applications, I ensure that your company harnesses the power of AI in a manner that's not only enterprise-friendly but also fully compliant with regulatory standards. Cross-Border Excellence: My expertise extends beyond borders, with over a decade of experience facilitating cross-border operations for companies in more than 20 countries. I am particularly adept at enhancing US-Mexico operations, ensuring seamless and efficient business transactions across these territories.
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Contracts
Rental Agreement
North Carolina
How long is a typical rental agreement?
I am a landlord who is looking to rent out a property I own. I am in the process of drafting a rental agreement but I am unsure of the typical length of a rental agreement. I need to know how long a typical rental agreement is in order to ensure I am making a legally binding agreement.
N'kia N.
In North Carolina, it is hard to identify a "typical" length of a property rental agreement. A one-year term is quite common for residential rental agreements. However, for commercial rental agreements, duration varies widely. For example, a lease agreement for a suite in a hair salon might be month-to-month while a lease agreement for a medical facility might be for ten years or longer. In and of itself, the length of a property rental agreement does not determine its validity; but it can certainly affect other aspects of the rental relationship. For example, duration might affect whether the rental agreement must be recorded, whether the landlord must have insurance, how much notice one party must give the other in specific circumstances, and even what happens when the lease expires. Once in effect, a faulty rental agreement can leave a landlord with fewer rights and more liability exposure than expected. It might not hurt to have a knowledgeable attorney review a proposed rental agreement before presenting it to a prospective tenant to sign.
Landlord Tenant
Rental Agreement
Washington
What's an addendum in a rental agreement?
I am a renter who recently signed a rental agreement for an apartment. I was provided with a copy of the agreement, but it included an addendum that I was not given an opportunity to review before signing. I am concerned that the addendum may contain terms that I was not aware of and would like to know what an addendum in a rental agreement is in order to understand my rights and obligations under the agreement.
Merry K.
An addendum to a rental agreement is the same as any other terms and condition that is part of the rental agreement itself. An addendum is binding. If you are concerned about the terms in the addendum, especially since you were not given an opportunity to read the addendum in advance, you should contact the landlord in writing to express your concerns, and note that you were not given the opportunity to read the addendum in advance and do not consider the addendum part of your rental agreement. For assistance, please contact a landlord/tenant attorney.
Landlord Tenant
Rental Agreement
Washington
Are there automatic renewals in rental agreements?
I am looking to rent a property and have read the rental agreement, however, I am unsure if there are any automatic renewals in the agreement. I have heard that sometimes rental agreements are set up to automatically renew after a certain period of time, but I am not sure if this is the case with my agreement. I am looking for clarity on whether or not the agreement I am signing includes any automatic renewals.
Merry K.
Residential month to month rental agreements and/or residential lease agreements often include terms regarding whether or not an agreement automatically renews. However, the Washington State Residential Landlord Tenant Law and/or ordinances in certain WA cities sometimes may provide the answer to your question. https://apps.leg.wa.gov/rcw/default.aspx?cite=59.18
Landlord Tenant
Rental Agreement
North Carolina
How to draft a fair rental agreement?
I recently moved to a new city and am looking to rent an apartment. I am unfamiliar with the laws and regulations around rental agreements in this area, and I want to make sure that I create a fair and legally binding agreement with my potential landlord. I want to make sure that both my rights and those of my landlord are protected.
N'kia N.
North Carolina General Statute 42 contains the North Carolina Residential Rental Act i.e. the landlord-tenant law. Generally, North Carolina landlord-tenant law requires that (1) a residential landlord keeps the property fit and habitable and (2) a residential tenant keeps the property safe and sanitary, pays the rental fee at the time and in the amount agreed upon, and follows (valid) agreed-upon rules. It also addresses other important issues like security deposit, late fee, required notice, termination, and eviction. One important aspect of the statute is that it does not allow a residential landlord to avoid or disclaim certain responsibilities simply by having a tenant agree in a rental agreement. Another important aspect of the statute is that it allows a residential tenant to recover money from a landlord who engages in certain particularly egregious conduct. It is important for a future residential tenant to know each party's rights and responsibilities before entering into a residential rental agreement. If you are considering signing a North Carolina residential lease, you are entitled to have an attorney review it and advise you before you sign.
Real Estate
Rental Agreement
Illinois
Does a rental agreement need witnesses?
I recently signed a rental agreement for an apartment that I am moving into next month. I was not asked to have any witnesses present when I signed the agreement, so I am wondering if a rental agreement needs witnesses in order for it to be legally binding. I would like to make sure that the agreement is valid before I move in.
Frank V.
Witnesses are not generally required for rental agreements.
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