Types

• The laws in all U.S. states permit some type of verbal residential lease agreement. Conversely, statutes across the country prohibit a verbal commercial lease agreement. The most essential reason for permitting verbal residential and yet not verbal commercial agreements rests in the complexity of these two types of contracts. Commercial lease agreements tend to be far more complex than their residential cousins.
  
  

Misconceptions

• Two opposing and mutually exclusive misconceptions exist regarding verbal lease agreements. On the one hand, some people conclude that a verbal lease agreement never is permitted, because contracts involving real estate must be in writing. In fact, contracts regarding the sale of real estate must be written. Not all lease agreements must take written form. On the other hand, some individuals conclude that any type of lease agreement can be oral. The fact is that only the simplest residential lease agreements can be made orally.
  
  

Time Frame

• The standard rule regarding an oral residential lease agreement is that the term of the contract must be month to month. A few states offer some deviation from this time frame. However, the typical law requires a residential lease agreement for a time period beyond one month to be written and signed by the landlord and tenant.
  
  

Effects

• A verbal lease agreement has precisely the same effect of a written agreement covering the same terms and conditions. A verbal agreement is a binding contract in the United States.
  
  

Features

• The features of a verbal lease agreement include identifying the property subject to the contract as well as the landlord and tenant. An oral lease agreement establishes the length of time the tenancy remains in effect and the amount of money the tenant is to pay to the landlord for rent.
  
  

Warning

• A downside to a verbal lease agreement rests in the possibility for confusion and misunderstanding. Because nothing is in writing, situations readily can arise in which the parties to a verbal lease agreement end up disputing what the actual agreement was between them.