Month-To-Month Lease: What It Is and How It Works

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Do you value your freedom, flexibility, and like to keep your options open when it comes to housing?

If that’s the case, a month-to-month lease might be just the thing for you.

Read on for all you need to know about this type of rental agreement, what it stands for, and how it works.

We’ve also covered the situations when it’s best to use it, and its pros and cons. After reading this article, you’ll be all set to decide whether it’s the right solution for you.

What Is a Month-To-Month Lease Agreement?

This type of rental agreement between the tenant and the landlord establishes occupancy of the rental property without setting a fixed end date.

This implies that there is no long-term commitment and the relationship can continue as long as both parties are in favor.

The fact that there’s no long-term lease agreement doesn’t necessarily make this type of lease a short-term one. Sometimes, this rental agreement may last for years.

DID YOU KNOW: The usual period for a lease agreement is 12 or 18 months, but it can vary depending on the circumstances. When it comes to leasing contracts, depending on the period the property is leased for, there are differences between a rental agreement and a lease agreement.

How Does a Month-To-Month Lease Work?

As its name implies, this lease is usually set up for 30 days. After this, there’s an automatic renewal in place, if neither the landlord nor the tenant gives notice that they want to end the lease.

Depending on the terms agreed, but also the local law, the tenant or the landlord must provide notice 30, 60, or 90 days in advance.

Although the period with this kind of rental agreement differs from a fixed-term lease, some clauses are present in both fixed-term and month to month leases:

  • Security deposit requirements
  • Insurance requirements
  • Pet policy
  • Late rental payments penalty
DID YOU KNOW: In some situations when the rental property is leased without a written agreement, like the tenancy at will, that type of relationship is also considered to be on a month-to-month basis.

When to Utilize Month-To-Month Tenancy?

Opting for this type of lease may be beneficial if you need or like to keep your flexibility.

There can be many reasons why a short-term lease may be a fit for you, whether you want a temporary place or you’re not ready to settle until you’ve found the perfect apartment.

Either way, this option may be great in case you:

  • Need to move frequently because of your job
  • You’re planning on changing jobs and you don’t want to limit yourself regarding the area
  • You’ve sold your property and haven’t found an ideal apartment to purchase yet
  • You want to try living in different neighborhoods or even cities
  • You can’t decide whether the apartment or other rental property fits your needs until you’ve lived in it for a while

There’s also the option to transfer to a month-by-month lease after your fixed-term lease has expired. Most landlords will be open to this option, especially if you have a good relationship.

This way, you can continue living in your rental apartment until you decide it’s time for a change and give your landlord proper notice.

DID YOU KNOW: Sometimes, tenants can continue living in the rental property after the lease agreement expires and their landlord doesn’t ask them to vacate. This is also known as a tenancy at sufferance.

Key Takeaways

Month-to-month leases are rental agreements that don’t have a set expiration date and are usually concluded for 30 days.
These leases have automatic renewal if neither the landlord nor the tenant gives notice that they want to end the agreement.
These types of rental agreements usually have clauses regarding the security deposit, pet policy, late rental payments penalty, and more.
The lack of a long-term agreement doesn’t necessarily make it a short-term lease. In some cases, they can last for years.

Pros and Cons of a Month-To-Month Lease

Depending on the circumstances and the lifestyle you prefer, we gathered the pros and cons to help you decide whether this housing option suits your needs.

Pros

  • Flexibility

Leasing a property with no long-term commitment through a month-by-month lease can be very liberating, giving you enough flexibility to find your ideal home, or move on short notice due to work or because you want to change your environment.

  • No Penalties

When you give notice, there are no penalties for moving out regardless of how long you’ve lived there. If the property is in a good condition, you’ll probably also get your security deposit back.

This is also a plus for landlords, allowing them to end their cooperation with bad tenants easier. To avoid this trouble, it’s always a good idea for landlords to use some of the top screening services for tenants, just to be on the safe side.

Cons

  • Pricy

On the other hand, the rent for month-to-month rentals is usually higher than the rent for the same category of the rental property leased long-term.

This is because landlords face the possibility of finding their rental property vacant in a short time and having to find a new tenant.

  • Unpredictable

Flexibility with rental agreements goes both ways, so you may find yourself in a situation where your landlord gives you a 30-day notice to find another apartment.

To fully enjoy the advantages of this short-term occupancy, make sure to always have a temporary place to stay until you find another suitable empty unit.

  • Terms Aren’t Fixed

The fact there is no fixed-term agreement to regulate the usage of the rental property for the entire period, you should be prepared for month-to-month rental agreement terms to change.

You will most likely face an increase in the cost of rent, utilities, and similar changes.

DID YOU KNOW: Some landlords are not sure how much to charge for rent in these situations, because a tenant can move out quickly with no penalties, leaving their rental property vacant again, which is why this type of lease is usually pricier.

Conclusion

When looking for a housing solution, it’s important to keep your options open and know your possibilities

With the facts presented in this article, you’re all set to weigh the pros and cons and make an informed decision.

Estimate your current and expected circumstances and decide if you’re more comfortable with a fixed-term arrangement, or you’re all about flexibility.

FAQ

Is month to month lease bad?

This entirely depends on your circumstances. This type of lease has its ups and downs, which we explained in this article, so you can decide whether it’s a good option for you. It may cost more, but it will provide you with the flexibility that can be worth it.

What happens when a lease goes month to month?

If that’s the case, the lease continues every month through automatic renewal until the landlord or tenant issues a notice to end the contract. This notice is usually required 30 days before the occupancy expires, but it depends on the agreement and local regulations.

What type of lease is month to month?

Month to month lease is a short-term rental agreement with automatic renewal that provides flexibility for both the landlord and the tenant. Despite the short-term nature, this type of lease can last for years if both parties agree on it.

ABOUT AUTHOR

Alex is an IT wizz gone SEO gone fire-juggler. We’re not even joking. When he isn’t researching why one personal loan is better than the other and which piece of hardware you should buy next, he’s rollerblading or selling homes (because he does that, too, the smarty-pants).

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