If you’re a tenant looking for convenience and flexibility, a month-to-month lease might be a good fit for you. This type of lease commits you to only a month at a time and allows you to cancel the lease at any point. There’s no loss of security deposit and no other penalties for canceling your lease as long as you give your landlord 30 days advance notice of your intent to move. A month-to-month lease can be attractive when you plan to live in an area for less than 12 months, buy a house in the near future, or if your future plans are uncertain. The downside is that rent is typically higher than a longer-term lease. Still considering a month-to-month lease agreement? Here’s what you need to know:
What is a month-to-month lease?
A month-to-month rental agreement is a lease you can terminate at any time with proper notice. Depending on your state, the required notice period could be as short as 30 days or as long as 90 days. Month-to-month leases typically renew automatically at the end of each leasing period. Month-to-month leases don’t necessarily need to be short-term. While they are nice if your situation requires short-term housing, a month-to-month lease can last years. However, because of the monthly renewal, a landlord could also ask you to leave at any time with the proper notice.
A month-to-month lease is sometimes called “estate at will” or an “at-will” agreement.
A month-to-month rental agreement could be helpful in several scenarios
- A long-term lease agreement can include a clause where it defaults to a month-to-month option after the original agreement ends. This clause comes into play when the tenant decides not to sign a new lease but does not want to move immediately. In this case, the lease will spell out the terms of the month-to-month arrangement, such as the new rental rate that will take effect and at what date the lease becomes month-to-month.
- A landlord may implement a month-to-month rental agreement when there is high demand for rental units in a particular neighborhood. This might be the case if a unit can be used as a short-term vacation rental during certain times of the year, if the area has a high student population, or if the area has a specific industry where the workforce fluctuates from season to season.
- A room rental agreement for a private home can also be a month-to-month lease. This type of lease is subject to local landlord-tenant laws, just like any other lease agreement. While many states accept an oral rental agreement as legal and binding when a tenant rents a room from a homeowner, it’s still wise to put the agreement in writing and have both parties sign it. This protects both the tenant and the landlord if a future problem arises.
Something to note: A month-to-month lease is very similar and often confused with a tenancy-at-will agreement, but there is one key difference. A tenancy-at-will is often a verbal agreement instead of a written lease contract. It also continues as a month-to-month agreement until either party gives notice.
Tenancy-at-will agreement
Tenancy-at-will is in place when a tenant and landlord have a general verbal agreement about the tenancy but nothing in writing that states the rental period or any required notice for moving out. There may be written terms about rental rates, however.
Just like with a standard rental agreement, both the landlord and tenant need to comply with the landlord/tenant rules within their state. For example, the tenant must keep current with rent payments and take financial responsibility for any damage they cause that is not normal wear and tear. The landlord is obligated to maintain the property in a livable condition and must provide the tenant with a 24-hour notice before entering the property.
What is a holdover tenant?
A holdover tenant, also referred to as “tenancy at sufferance,” is a month-to-month tenant whose lease has expired and who no longer has the landlord’s permission to remain in the property, but has not yet been evicted.
If a holdover tenant continues to pay rent and the landlord accepts the rent, their rental terms change to tenancy-at-will, and they have the right to remain in the property.
If the landlord doesn’t accept rent payments from the holdover tenant, the situation will be considered trespassing, which means the tenant must move out of the home or face eviction.
Renting a room month-to-month
You may find an opportunity to rent a room from a private homeowner on a month-to-month basis. Renting a room this way works much the same as renting an apartment month-to-month but usually involves a few additional rules in the lease to ensure household harmony.
You will be asked to sign a lease agreement when renting a room month-to-month. Typical lease terms include:
- The move-in and move-out date
- The rental rate
- Specifics about a security deposit and any other payments, you’ll be responsible for your share of utility costs
This protects both the homeowner and you and documents the rights and responsibilities of both parties.
The lease agreement for renting a room will also include what happens when you terminate the tenancy, including how and when the notice must be delivered to the homeowner and vice versa. In addition, most private homeowners will include house rules such as possible curfews and any restrictions on guests, smoking, or drinking alcohol. The house rules may also include areas of the home which are off-limits to the tenant.
As a tenant renting a room on a month-to-month basis, you may have more house rules to follow – but less responsibility, such as overall maintenance and clean-up, than you would in a regular month-to-month rental.
Is a month-to-month lease best for you?
There may be a few situations where renting month-to-month makes sense.
If you:
- Are you new to a city, such as if you’re renting an apartment in Atlanta or a house in San Deigo, and don’t know the area you’d like to live, a short-term rental gives you flexibility while you search.
- Expect a life change in the near future, like a career move, marriage, or a child? You may not want to be locked into a long-term lease and would prefer the flexibility of a short term rental.
- Plan to buy your first home but are still searching for the perfect house? A month-to-month lease may be a good fit.
- Bought a home still under construction and don’t have a confirmed move-in date? A month-to-month lease gives you the convenience of moving when your new home is complete.
- Work in a job that demands a lot of travel, like travel nursing, flight attendant, tour guide, actor/actress, artist, business consultant, aid worker, nanny, or journalist? A month-to-month lease may be best for you.
- Have a roommate who does not plan to stay for a full 12-month lease term? A month-to-month rental gives you the flexibility to either move or find a new roommate.
Month-to-month tenancy can also benefit landlords looking to increase rents regularly, complete renovations or improvements at the property, or consider selling your house in the near future.
A month-to-month lease is common among close friends or family members. People are often willing to offer short-term situations to help someone they know well, want to help out, and can trust.
Tenancy at-will might be a logical next step in some situations once the month-to-month lease has expired. Tenancy at-will allows you to leave the spur of the moment, as well as avoid rent increases.
Drawbacks to a month-to-month lease
While a month-to-month lease may sound ideal for flexibility and convenience, there are a few drawbacks.
- Rent is more expensive month-to-month compared to a longer-term lease. The landlord anticipates more wear and tear in a month-to-month rental, with tenants moving in and out more frequently, so they often charge more in rent to cover their expenses. As a short-term tenant, you can expect to pay more for convenience.
- The landlord could terminate the lease at any time, with appropriate notice, leaving you to scramble to find another rental in a short period of time.
- Rent instability that comes with a month-to-month lease can be challenging for some tenants to handle. And the uncertainty of not knowing for sure whether you’ll be able to stay in your rental after next month or if the terms of your lease are going to change may not be worth the convenience you gain as a tenant. The landlord may decide not to allow pets or remove a parking spot, which could create a problem for you.
- Rent negotiation is much less likely. Landlords know they can hold firm on the rental price or the terms of a month-to-month lease. They don’t need to negotiate rent as they can give you notice to vacate anytime and can justify higher rent because they don’t know if you plan to stay from one month to the next.
How a month-to-month lease works
A month-to-month lease works in the same way as a long-term lease, with rental terms that involve:
- Rental rates
- Length of tenancy
- Security deposit amount
- Move-in and move-out date
- Rights and responsibilities of both parties
- Consequences of late rent payments
- Renter’s insurance requirements
- Pet Policy
- Lease renewal policy
A month-to-month lease usually includes a clause that outlines the landlord’s right to raise the rent at the next lease renewal.
If either party wishes to terminate the lease, they must, at minimum, provide the other with a 30-day notice, although either party can also ask for more time to terminate the lease if necessary.
However, unlike with a long-term lease, the landlord can change any lease terms with a 30-day notice. Local and state laws will dictate the notice period and how much the rent can be increased.
How a month-to-month agreement is terminated
To end a month-to-month agreement, the tenant or landlord must provide the other with a notice to vacate. This is a written notice with a standard of 30 days to comply.
Exceptions will come into play in certain situations, such as if the renter has damaged the rental property or if they are not following the rules and responsibilities outlined in the lease agreement. In these situations, the landlord has the right to ask the tenant to move as soon as possible without giving additional notice or taking formal steps to evict. However, if the tenant refuses to leave, a landlord must follow the notice process specified in local landlord-tenant regulations and all appropriate steps to initiate eviction.
What can you do if the landlord decides to terminate your lease?
Unfortunately, if the landlord gives you proper notice, you have no legal recourse. That is the nature of a month-to-month lease.
Can you ask to change the terms of your month-to-month lease?
Unlike the landlord’s ability to make monthly changes, as a tenant, notices don’t work the same way. The lease still states any rights and responsibilities you have as a tenant. However, you could ask your landlord to approve you for a standard lease if your plans solidify and you know you’ll be staying in the area for an extended period of time.
Whether or not a month-to-month rental situation suits your needs will depend on your circumstances, budget, and living preferences. Month-to-month rental agreements offer great flexibility for tenants, but be sure to consider all the factors before signing on the dotted line.
This post first appeared on Redfin.com. To see the original, click here.