The difference between a lease and a monthly tenancy is important in Sri Lanka. The term 'tenancy' has a slightly different meaning than usual elsewhere, in that it means giving the use of immovable property for rent to another for successive periods. Tenancies may be terminated by landlords with a month's notice without cause and this may be followed by legal action for eviction, unless the premises are protected under the Rent Act (see below). Tenancies are subject to no stamp duty unlike leases which are stamped at 1% of the total rent for the demised term.

A lease contract is however normal for high-end, fixed-term contracts, because it gives more secure possession, and allows more certainty as to term. A lease must be by a deed signed in the presence of two witnesses and a Notary, and registered at the Land Registry. Leases as in tenancy agreements could contain such other conditions as the parties may agree upon.