When dealing with rental properties, a written lease agreement is always the safest practice for both landlords and tenants. However, the question often arises: are oral leases actually valid in Texas? The answer is generally, “Yes, but with limitations.”
The Statute of Frauds
Under Texas law, specifically the Statute of Frauds, an oral lease is legally enforceable only if its term is for one year or less. The Statute of Frauds is codified law that requires certain types of contracts—including leases that cannot be performed within one year—to be in writing to be legally enforceable.
Therefore, if a landlord and tenant verbally agree to a 12-month lease, that agreement is generally valid. If they verbally agree to an 18-month lease, that agreement is unenforceable because it must be in writing.
What to Do When There is No Lease
It is common for property managers to take over a property where the owner has lost the lease or never had a written one. In this scenario, where there is no written contract, the tenancy is treated as a month-to-month tenancy.
The standard practice is to immediately put these tenants on a new, written lease, such as the Texas Association of Realtors (TAR) lease, to ensure the landlord has uniform legal protections. This also provides an opportunity to adjust the rent to the current market rate, which is often below market for month-to-month tenants.
Terminating a Month-to-Month Tenancy
If you have a tenant on a month-to-month oral tenancy and you wish to terminate the arrangement, you must provide a 30-day written notice. This requirement is mandated by the Texas Property Code, Section 91.001.
It is crucial to differentiate between an oral month-to-month agreement (no original lease) and a situation where a written lease has expired and automatically converted to a month-to-month tenancy—often called an evergreen clause—which is a common provision in the TAR lease. In either case, the 30-day written notice rule for termination applies.