A month-to-month lease can make sense for you as a tenant seeking convenience and flexibility. With this kind of lease, you can end it whenever you choose and are only locked in for a month at a time. If you give your landlord 30 days’ notice in advance of your intention to move, you can terminate your lease without losing your security deposit or incurring any other fines. If you want to purchase a home soon, dwell in a location for fewer than a year, or have erratic future plans, a month-to-month lease may be appealing.
The drawback is that compared to longer-term leases, rent is usually greater. Are you still thinking about signing a month-to-month lease? This is what you can expect.
What is a month-to-month lease?
When you have a month-to-month rental arrangement, you can end it whenever you want as long as you give enough notice. The mandatory notice time may vary from 30 to 90 days, depending on your state. Normally, month-to-month leases automatically renew at the conclusion of each leasing term.
Short-term leases are only sometimes required for month-to-month agreements. Although they are good if you need temporary lodging for a particular situation, month-to-month leases can extend for years. But because of the monthly renewal, a landlord has the right to request your departure at any moment as long as they give you enough notice.
So a lot of homes that were available for sale in the initial days can be easily rented out on a monthly basis. For instance, a capital smart city plot can be rented on a month-to-month lease until it gets sold. Thus it will allow the owner to benefit even before the sale.
Uses of a month-to-month renting agreement
- A month-to-month option may be the default when the initial lease term expires in a long-term leasing arrangement. When a renter chooses not to sign a new lease but still wants to delay moving out, this clause becomes applicable. In this instance, the conditions of the month-to-month agreement, including the new rental rate that will apply and the date the lease becomes month-to-month, will be spelled out in the lease.
- When there is a lot of demand for rental properties in a specific neighborhood, a landlord may decide to use a month-to-month leasing agreement. This may be the case if the property can be rented out for a brief period of time during the year, if there are a lot of students in the region, or if the location is home to a particular sector whose employment varies with the seasons.
- A month-to-month lease can also be used for a room renting agreement in a private residence. Like any other lease arrangement, this kind is governed by the landlord-tenant regulations in your area.
- Even though renting a room from a homeowner is legal and enforceable in many places, it’s still a good idea to put the agreement in writing and have both parties sign it. In the event that a future issue emerges, this safeguards both the renter and the landlord.
Pros and Cons of month-to-month lease agreements
- Authority over the deadline. Tenants are not required to sign a long-term lease and are free to vacate the property with as little as 30 days’ notice. Landlords have more control over their property because they can decide to terminate the agreement with the same ease.
- Cash flow flexibility. If they so choose, landlords are able to alter the monthly rental amount. Renters can quickly take advantage of a better deal somewhere else.
- Calmness of mind. If a renter leaves before a long-term lease expires, they are not forced to breach the agreement or locate a replacement tenant. Bad tenants can be fired by landlords far more quickly than under a long-term contract.
- Relocating or temporarily replacing a tenant. On short notice, landlords may find themselves stranded with an empty home. It may be necessary for tenants to find new housing quickly.
- Greater rents and less stable income. Because abrupt vacancies that cannot be filled right away may occur, renters typically pay higher rents than those with long-term leases. Rent that is less predictable than what a long-term lease would provide for landlords can be a problem.
- Ambiguity. Renters need to constantly have a fast-move plan in place because they can’t be certain of their lease for longer than a month. It is not guaranteed to landlords that there will always be a pool of renters ready to put up with the volatility of a month-to-month lease.