Real Estate Leases

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Fixed Term Leases

Contracts that lock in rental terms for a set period of time.

Why fixed-term leases are best for tenants

The second type of agreement that landlords and tenants can enter into is called a fixed-term agreement, commonly known as a lease. A lease is different from a month-to-month agreement in that it fixes all terms of the agreement for a specific period of time, typically, but not necessarily, one year. Whereas a monthly rental arrangement can change on thirty days’ notice, no changes can occur in the terms of the lease while the lease is in effect. Rent cannot be raised. A landlord cannot give notice and force a tenant to move on thirty days’ notice. It is because the contract does lock in the terms of the agreement for a fixed period of time that a lease is known as a fixed-term agreement.

And just as the landlord is obliged to allow the tenant to stay in the unit for a year, the tenant is obliged to pay rent for the full year. If a tenant has a year-long lease and moves out after nine months, he is legally obliged to pay the remaining three months’ rent, whether or not he is living in the dwelling. A lease is a year-long contract obligating both sides.

Another important thing to realize about a lease is that, unlike a month-to-month agreement, it ends automatically. No notice needs to be given to terminate a lease. When the lease term ends, that is it. The tenant is supposed to move out that day, unless the lease has been renewed.

Whereas a month-to-month arrangement can be made either verbally or in writing, a lease must be in writing due to something called the statute of frauds. That statute mandates that certain types of contracts must be in writing to be valid. Under the statute of frauds, agreements that last a year or more, and that pertain to land and real estate, like leases, are required to be in writing to have any legal effect. If they are not, it is as if no agreement was ever made. An oral lease that purports to last longer than a year is void.

The Important Legal Concept to Remember: Rental agreements vary greatly. Landlords should usually try to get their tenants to enter into written rental agreements, and tenants should almost always try to get a lease.

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