Estimated reading time: 4 minutes
Month-to-month leases are becoming increasingly popular in today’s real estate market, accommodating a wide range of needs and preferences. Whether you’re a seasoned landlord, a new homeowner, or a renter on the move, understanding the details of these flexible agreements is vital. Let’s dive into what they are, how they work, and if they’re the right fit for you.
What is a Month-to-Month Lease?
At its core, a month-to-month lease is like a handshake that renews every 30 days. It’s a commitment that’s not really a commitment, offering a single month of tenancy at a time, with the option to extend month by month. This setup is perfect for those who value flexibility over long-term stability.
Traveling professionals, like auditors, travel nurses, and corporate trainers, for example, may be assigned to an area for an indeterminate time frame; they will need accommodations until the project is completed, but the timeline is uncertain. They cannot commit to a longer-term lease, and they may be willing to pay a higher monthly rate for the flexibility afforded by month-to-month rental agreements.
As a side note, the term “rental agreement” is typically used for tenancies lasting less than a year, while “lease” is more often associated with terms of one year or more. But it’s increasingly common to hear “month-to-month lease” rather than “month-to-month rental agreement” so we’ll be using the terms interchangeably.
How Month-to-Month Leases Work
In many ways, a month-to-month lease works exactly the same way as a long-term lease. As the landlord, you will still:
- Advertise the unit for rent.
- Screen applicants.
- Accept a deposit.
- Set policies (for things like late rent payments, pets, and renter’s insurance).
Draft a legal agreement to be signed by your tenants and yourself.
The difference is that tenants and landlords are not locked into the lease for longer than 31 days at a time with a month-to-month lease. Instead, both parties agree to a one-month lease with the understanding that the lease will roll over to the next month on the same terms unless either party provides notices to terminate the lease or change the terms of the lease.
The Pros and Cons of Month-to-Month Leases
- Pros for Landlords: Flexibility reigns supreme. You can adjust rent, manage occupancy according to your needs, and avoid long-term mismatches with tenants.
- Cons for Landlords: The flip side is the potential for high turnover and vacant periods, which can be a bit of a juggling act.
- Pros for Tenants: This is all about freedom. Move when life calls, without the drama of breaking a lease.
- Cons for Tenants: Stability takes a hit, and you might face unexpected rent hikes or move-out notices.
How to Terminate Month-to-Month Lease?
To terminate a month-to-month lease, either the landlord or the tenant typically needs to provide the other party with a written notice of their intention to end the lease agreement.
The notice period is often 30 days, but it can vary depending on local laws and the terms of the lease agreement itself. This notice should be delivered in a manner that can be documented, such as via certified mail or hand delivery with a witness, to ensure there is a record of the notice being given. It’s important to consult local regulations or a legal professional to ensure that the termination adheres to any specific legal requirements in your area.
Why Would You Want a Month-to-Month Lease?
For renters, it’s the ultimate freedom play—maybe you’re testing out a new city, in between jobs, or just not ready to commit to a year-long lease. It gives you the liberty to explore, move for work, or simply change your scenery without the heavy penalties associated with breaking a longer lease.
For landlords, it’s about flexibility and control over your property. You might have plans that don’t fit the one-year lease mold, like renovating, selling, or even using the property for personal reasons at certain times of the year. Or, perhaps you’re looking to maximize returns in a hot rental market where you can adjust rent more frequently to match current rates. Month-to-month leases can be a strategic tool, allowing you to adapt to market conditions and tenant dynamics with ease.
Creating Your Month-to-Month Lease Agreement
Simplicity is your friend here. Cover the essentials — rent, due dates, notice periods, and any specific stipulations like pet policies. Keeping it straightforward will save headaches down the line.
FAQs Unpacked
- Rent Increases: How much notice do you need? Typically, a month, but local laws have the final say.
- Ending the Lease: A 30-day heads-up is usually the norm, but again, check your state’s rules.
- Tenant Rights: Safety, privacy, and a habitable environment are your non-negotiables.
