Rental lease agreement terms, explained

June 27, 2020

A simple guide to understanding common rental lease agreement terms

Not all rental lease agreements are the same! Knowing exactly what your rental lease agreement says before signing it is of the utmost importance. 

Understanding a rental lease agreement may seem like a daunting task, but luckily, we’re here to help! Learn these common rental lease agreement terms so that you can sign with confidence. 


Term #1: Lessee/Lessor

A rental lease agreement is a contract between two parties: the lessee and the lessor.

The lessee is the lease-holder, also known as the tenant. The lessor is the landlord, property owner, or property management company. 


Term #2: Sublease 

Subleasing is the process of renting out your unit to a person who isn’t the lease-holder. 

Some important things to note about subleasing: 

  • You aren’t allowed to sublease the unit without the approval from the lessor
  • You are responsible for ensuring the rent is paid 
  • You’re also responsible for any damages done by the subtenant. 


Term #3: Eviction

An eviction is the legal process where the lessor terminates the rental lease agreement early and requires the tenant to leave the unit by a certain date. 

This can occur for multiple reasons such as: not paying rent, breaking the rental lease agreement terms, and more. 


Term #4: Grace period 

Did you miss the rent payment deadline? This is where a grace period can come in handy.

The grace period is the length of time after the rent due date that you can still pay without incurring a late fee. 


Term #5: Renewal

Once the initial lease period is over, you’ll have the option to continue (renew) the agreement. 

The time period for the renewal depends on your specific rental lease agreement. However, it’s common to have two options: to be able to renew for the same amount of time you initially signed for, or to switch to a month-to-month basis. 


Term #6: Termination 

A termination occurs when either the lessee or the lessor decides to end the rental lease agreement for any reason, ranging from not renewing the agreement to eviction. 


Term #7: Co-sign

Typically, a co-signer is needed to vouch for a tenant when they have an inadequate rental or credit history. 

This person doesn’t actually live in the unit, but is held accountable for the responsibilities of the agreement if the primary lease-holder fails to meet the terms of the contract.


Term #8: Extended absence 

Extended absence specifies the minimum amount of days the tenant can be out of town  before they have to notify the lessor. 

This is usually a precaution that property managers take in case of emergencies. 


Term #9: Abatement

An abatement clause enables the tenant to suspend their lease and pause payments if damage to their unit (outside of their reasonable control) occurs and makes it unlivable, causing them to live somewhere else.


Read more: 

How to understand a lease or rental agreement


A rental lease agreement is a legally binding contract between the lessee and the lessor that outlines the rights and responsibilities of each party––which is why understanding the rental lease agreement terms, clauses, and requirements before signing is crucial.


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