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

Posted by Tristan R. Pettit, Esq. in Rental Agreements, Rental Documents / Comments

A question that I am often asked is what is the difference 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 of time with a specific beginning date and a specific 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. They key component of a lease is that it is for a specific duration of time. 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, however a lease for more than one year must be in writing in order to be enforceable. It is my recommendation that all leases be in writing.

A "Periodic Tenancy" is another type of rental agreement. A periodic tenancy is a tenancy that has a beginning date but no end date and continues indefinitely until terminated by either the landlord or tenant. The most common type of periodic tenancy is a month to month. A periodic tenancy can be in writing or oral. It is my recommendation 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 thing as the month to month tenancy continues indefinitely until terminated whereas the 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

T