Also known as: parol leases · oral lease · verbal lease
Written by attorneys · grounded in primary & secondary sources — see below
An oral agreement that creates a landlord-tenant relationship for real property. The agreement is enforceable if its duration does not exceed the period specified in the applicable statute of frauds.
Priya Prasad orally agreed with Phoenix Technologies to lease office space for nine months at a fixed monthly rent. Phoenix took possession immediately and paid rent each month. When a dispute arose over early termination, the court enforced the arrangement as a valid periodic tenancy because the term fell within the one-year limit of the statute of frauds.
Preston Pratt orally agreed with a neighboring landowner to lease farmland for one growing season in exchange for monthly payments. Pratt took possession, installed irrigation equipment, and paid rent for the season. When the landowner later sought to terminate early, the court upheld the oral lease because its term did not exceed the one-year period permitted by the statute of frauds.
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An oral lease is enforceable if its duration does not exceed the period specified in the controlling statute of frauds, typically one year. Possession and payment of rent accepted under the lease terms may also create a periodic tenancy even if the original agreement is invalid.
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Part performance such as taking possession and paying rent accepted by the landlord can create a periodic tenancy. Substantial improvements clearly referable to a specific longer term may support full enforcement of that term in some jurisdictions.
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The lease receives no effect unless an exception applies. Taking possession alone creates a tenancy at will. Taking possession plus acceptance of rent creates a periodic tenancy that incorporates all terms except the stated duration.
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Promissory estoppel may enforce an oral lease when the promisor should reasonably expect the promise to induce substantial action or forbearance, the action occurs, and injustice can be avoided only by enforcement. Courts limit the remedy as justice requires.
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…may embrace the holders of a wide spectrum of leasehold interests in land, from the month-to-month tenant holding under an oral lease, on the one hand, to the long-term lessee holding under a carefully negotiated written lease, on the other. The system which permitted a lessee for a very short term to vote might easily…