If you're new to property management in Hooper, Utah, jargon can come at you like hail in a storm. Lease agreements? Renewals? Extensions?
We're here to calm the storm and provide some answers.
In this guide, we'll explain two of these terms: lease renewal and extension. While they may sound similar, they do have significant differences. Read on to learn whether lease extension vs. renewal is the right option.
What Is a Lease Extension?
A lease extension simply means lengthening an existing lease. All lease agreements will have an end date; you'll push back that date with an extension.
Put another way, extending a lease is a continuation of an existing lease rather than a new one. So it will cover all the same terms and rules. Most people use lease extensions on a month-by-month basis.
It's typically used for an existing tenant who wants to stay in the property without signing a brand new contract with an end date that's years away.
One important point to note with lease extensions is that the terms of these legal agreements vary by state. You must check local Utah laws to ensure you abide by all rental regulations.
What Is a Lease Renewal?
A lease renewal is a formal process for lease agreements. It involves the tenant and landlord signing an agreement to extend a lease.
Often, this will include terms and timescales similar to the initial lease. So if the original lease was for one year, a lease renewal could be another year.
When renewing a lease, the tenant and landlord may agree or renegotiate terms. That might include the rental price, tenant rules, or maintenance responsibilities.
External factors, such as legal responsibilities, may also shape the detail of the lease.
For example, if Utah changes state laws about landlord responsibilities, these may need to be added to the lease renewal. Eviction notice periods are an excellent example of a term in which government laws may change.
Key Differences Between a Lease Extension and Renewal
Both lease extensions and renewals allow tenants to stay in a property after their initial lease expires. That's the main similarity. But there are essential differences between the two.
First, a lease extension is often for a shorter period. A tenant may extend one month at a time. It's the most flexible arrangement of the two.
In contrast, renewals will generally be for longer periods, like a year or more. They will often cover the same period as the original lease.
Secondly, a renewal gives landlords and tenants more control over the lease terms. You both can change these terms, providing you agree as part of the negotiation. So it can offer more long-term security for both parties.
Lease Extension Vs. Renewal: Know Which Is Right for You
Before you agree to keep a tenant, consider lease extension vs. renewal to decide which is best for you.
An extension may be the best choice if you don't want a long-term commitment. But if you're going to keep the tenant but change lease terms, choose a renewal.
Contact our team for more help with lease agreements and other property management aspects. Our managed property services, like a tenant background check, may be the perfect answer for your Hooper, Utah, property.