What Is The Difference Between a Rental Agreement, a Lease, and a Month-to-Month Tenancy

A question that I am often asked is what the difference is between a rental agreement, a lease, and a month-to-month tenancy.

I will do my best to explain.

The "Real World" Answer

A "Rental Agreement" is the general term that is used to cover all types of rental tenancies. A rental agreement includes a lease and a periodic tenancy (such as a month-to-month tenancy).

A "Lease" is a specific type of rental agreement. A lease is a tenancy for a definite period, with a specific start date and end date. A lease can be for any duration of time that you can think of . . . 10 years, 5 years, 1 year, 6 months, 3 months, 1 month, or even for 1 week. The key component of a lease is its specific duration. I often refer to a lease as a "lease for term" to remind people that we are dealing with a tenancy for a specific period of time (i.e., term). A Lease can be in writing or oral; a lease for more than one year must be in writing in order to be enforceable. I recommend that all leases be in writing.

A "Periodic Tenancy" is another type of rental agreement. A periodic tenancy is a tenancy with a start date but no end date, continuing indefinitely until terminated by either the landlord or the tenant. The most common type of periodic tenancy is a month-to-month. A periodic tenancy can be in writing or oral. I recommend that all periodic tenancies be in writing.

While the definitions are fairly straightforward, things become muddled because many people use the terms improperly and/or interchangeably. For example, I often hear people say that they have a "month-to-month lease." There is no such thing as a month-to-month lease. You either have a month-to-month tenancy or you have a lease. They are not the same; a month-to-month tenancy continues indefinitely until terminated, whereas a lease has a specific end date.

The "Law School" Answer

A rental agreement is defined as an oral or written agreement between a landlord and tenant for the rental or lease of a specific dwelling unit or premises, in which the landlord and tenant agree on the essential terms of the tenancy, such as rent. Wis. Stat. § 704.01(3m) (2015-16).

A lease is defined as an agreement, whether oral or written, for the transfer or possession of real property or both real and personal property, for a definite period of time. Wis. Stat. § 704.01(1) (2015-16).

A periodic tenancy, while having a specific start date, does not have a specific end date and continues indefinitely until either the landlord or the tenant terminates the tenancy. A periodic tenant holds possession of a rental property without a lease and pays rent on a periodic basis. Wis. Stat. § 704.01(2) (2015-16).

Thanks

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