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The Advantages and Disadvantages of Oral Leases

Leases, like many contracts, do not have to be in writing. The landlord and tenant can agree to the terms of the lease contract orally and that contract is binding on both parties. However, there are advantages and disadvantages to entering a lease without a written contract that both the landlord and the tenant should be aware of before reaching a binding agreement.

The Disadvantages of an Oral Lease

Without a paper copy to look back on, it can be very difficult to determine what the terms of the lease are at a later date if the landlord and the tenant have a misunderstanding about the lease terms. For example, if an appliance breaks in the dwelling both parties may, in good faith, believe the other party to be responsible for its repair. However, without a written lease to look back on it is hard to tell which party had a correct recollection of their oral lease agreement.
Other situations may arise when one party does not act in good faith and tries to manipulate or change the contract to their advantage because there is no written record of it. For example, a tenant who entered a 12 month lease with the landlord and in month 5 has decided to relocate to another city may try and claim that the lease was a month to month agreement and not for a full year. Without a written lease as confirmation, it could be difficult for the landlord to prove that the lease was in fact for a one year period.

The Advantages of an Oral Lease

Oral leases can be easy to modify and easy to change on short notice. So, if the parties do agree to a month to month lease, the tenant can simply pick up the phone a month before he wishes to move and inform the landlord. Similarly, the landlord can evict the tenant in an oral month to month lease by telling him that he has 30 days to vacate the property. It is easy to do and does not require cause or any other conditions that are common in a written lease.
Oral leases may also be advantageous to tenants for another reason. Many written leases favor landlords. Written leases tend to contain more provisions, qualifications and responsibilities. Oral leases tend to be simpler and easier to understand.
Whether you decide to enter an oral or a written lease is a matter of personal preference for both you and your landlord. However, you should be aware that an oral lease can leave you vulnerable and is usually open to interpretation. Most landlords will prefer that a written lease be signed, especially if they are in the business of renting out more than one dwelling.
So, while oral leases are usually enforceable they may not be desirable. It is important to remember that written leases can be negotiated if there are terms in the original draft with which you are not comfortable and a written lease can give you a definite and permanent record of your agreement with your landlord should any issues later arise.

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