The Advantages and Disadvantages of Oral Leases

Leases, like many contracts, don’t always have to be in writing. In some cases, landlords and tenants can decide the terms of their agreements orally while still making terms that are legally binding on both sides. However, there are advantages and disadvantages to entering a lease without a written contract that both the landlord and the tenant need to know before deciding which to use.

The Disadvantages of an Oral Lease

If you don’t have a hard copy to reference, it becomes very difficult to verify the terms if there are any disagreements or a misunderstanding about the conditions later; perhaps something in the apartment breaks and each party genuinely believes it’s the other’s responsibility for getting it repaired. Without a written document to review, you may be unable to figure out who is responsible for what.

Someone could also attempt to take advantage of the other side by trying to intentionally manipulate or change the contract, since there’s no clear record of the agreements. For example, a tenant who entered a 12-month lease with the landlord but wants to move early could try to say it was a month-to-month agreement. Without anything written down for confirmation, it could be difficult for the landlord to prove that it was in fact for a one-year period.

Issues could also arise if a tenant wants to negotiate some of the original rules and requirements that they’re presented with initially when the parties reach an agreement. In a case like that, a written lease can provide a definite and permanent record of your agreement with your landlord should any issues come up related to those changes.

There may be time limits on your oral lease as well. In general, a lease that is good for more than one year could be considered invalid under the Statute of Frauds, a legal concept that can vary a bit from jurisdiction to jurisdiction. Usually, this requires a written record if a rental agreement will extend beyond one year, or else the deal may be deemed unenforceable. That could mean if a landlord or tenant agreed to a two-year lease but either one wants to break it early, the other may end up with no legal recourse to stop them. They could both even acknowledge that it was supposed to be a two-year lease, but because the contract must be considered void under the Statute of Frauds, the parties can’t be bound by it. Know the laws specific to your area before you agree to an oral lease.

The Advantages of an Oral Lease

One of the biggest advantages to an oral agreement is that can be easy to modify and change terms on short notice. If it’s a month-to-month lease, the renter could reach out to the landlord directly over the phone to give 30-days notice if they intend to move. The landlord would also be free to call the tenant at any time to end the lease with 30-days notice. It is easy to do and does not require cause or any other conditions that are common in a written lease.

Written leases tend to contain more provisions, qualifications, and responsibilities, versus oral leases which tend to be simpler and easier to understand. This can be especially advantageous if a renter is fairly inexperienced with landlord-tenant law and wants to rent from a more experienced landlord, or if either party doesn’t have in-depth knowledge of landlord-tenant law.

Whether you decide to enter an oral or a written lease is often a matter of personal preference for both you and your landlord. However, you should know that an oral lease can leave you vulnerable and is usually open to interpretation under the law. Most landlords do prefer a signed, written lease for security, especially if they have multiple rentals and need to keep track of different tenant arrangements.

So, while oral leases are often enforceable under the law, they may not be desirable. Understand the laws that are specific to your situation before you decide which way to go.

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