An owner or landlord who leases out a home or piece of land is formally known as a lessor. Conversely, the tenant or renter in a lease contract is the lessee. Although commonly used as a catch-all term, a rental agreement is not the same as lease when it comes to residential real estate contracts.
Lessees and Lessors Are In It for the Long Haul
A lease contract is used for a long-term tenancy period. A lease provides both the lessee and lessor more security, as the lessor can't legally raise the rent or ask the lessee to leave without good reason until the end of the tenancy period. Tenancy periods in a lease usually last at least six months to a year, but may last more than one year.
Rental Contracts Cover A Relatively Shorter Period
Rental contracts typically last 30 days and automatically renew at the end of the 30-day tenancy period. Rental contracts of 30 days are also known as month-to-month rentals. A rental contract may cover a shorter time frame, such as several days or one to three weeks. This is often the case with vacation rentals. Because it is distinct from a lease agreement, the parties to a rental contract are not referred to as lessees or lessors.
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Lessees May Become Renters After Tenancy Period
A lease agreement may automatically convert to a month-to-month rental agreement after the lease expires. Unless the lessee signs a contract to renew a lease, the lessee may automatically become a renter, losing the rights and security initially held with the lease agreement. The landlord may raise the rent as long as he follows state-mandated notice rules or he may ask the renter to leave with appropriate written notice. However, the renter is subject to the same rental terms outlined in the prior lease contract, such as rent amount, pet restrictions and responsibility for utilities.
Rights and Responsibilities of Lessees
Lessees are protected under federal, state and local landlord-tenant laws. They also enjoy any additional rights and privileges outlined in the lease contract. In general, the law provides protection from discriminatory practices in rental and eviction processes. It also allows the lessee to enjoy the rental premises, live in a residence free of health and safety hazards, request necessary repairs and maintain a certain amount of privacy.
In exchange, lessees must pay rent on time, care for the premises, pay for damages they cause to the property and follow all rules outlined in the lease. The contract may specify certain responsibilities, such as the need for the lessee to immediately report problems with the property to the lessor, maintain yards and keep noise to a minimum.
Lessor's Rights and Responsibilities
In addition to collecting a certain amount of rent over the tenancy period, a lessor has the right to end a tenancy under certain circumstances, such as when the lessee breaks any lease terms. The lessor can also recoup monetary losses from a lessee for breaking the lease early or damaging the premises. The lessor can withhold all or part of the lessee's security deposit, sue for damages and report the lessor to a collection agency, negatively impacting his credit.
Lessors have many responsibilities to uphold during the tenancy period. They must hold security deposits in a trust or escrow account -- separate from personal funds -- to reimburse the lessee at the end of the lease period. State laws govern procedures for refunding security deposits, which lessors must follow. A lessor must also follow certain laws and procedure when evicting a lessee.