A month-to-month lease is an agreement between a landlord and a tenant that continues each month with no specified end date.
Instead, the landlord or tenant can end the lease at any time last long as enough notice is given. The lease agreement should specify the time, but most states require at least 30, 60 or 90 days.
Most rental agreements are 12 months long, but this doesn’t work for everyone. A month-to-month lease is especially attractive if your immediate future is uncertain and you’re unsure when you’ll need to move.
Here’s what you need to know about this type of leasing arrangement and whether it’s the right fit for you.
— What is a month-to-month lease and how does it work?
— How do you give notice for a month-to-month lease?
— Advantages of a month-to-month lease.
— Disadvantages of a month-to-month lease.
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What Is a Month-To-Month Lease and How Does it Work?
A month-to-month lease is a rental agreement with no set rental period. The standard 12-month lease requires a commitment of at least a full year, whereas month-to-month leases renew every 30 days until the tenant or landlord terminates the contract.
The application process for month-to-month leases is similar to most standard rental applications, but this depends on the landlord or property management company. After your application is approved, you’ll sign the rental agreement, receive a move-in date and pay your first month’s rent and a security deposit.
Once you move into your new home, you’ll pay rent and utilities similar to other rentals. The difference is that when you decide to move out, you’ll need to give your landlord sufficient notice. The lease terms should tell you how much notice to give your landlord before moving out. In most states, it’s required for either the landlord or tenant to give a 30-day notice to end a month-to-month lease.
Renting on a monthly basis can be ideal, especially if:
— You might move soon: If you think you might be moving within the year, a month-to-month lease may be a better option. Terminating a lease before the end date could cost you. You’ll either have to pay an early termination fee, find another tenant to fill your unit or pay the amount the landlord lost in rent because you moved out early.
— Your next home is under construction: A short-term lease is a good option if you’re building a new home and you don’t know how long it will take.
— You want to travel: Globetrotters can save on hotel costs by choosing a short-term lease. A month-to-month lease can enable you to stay as long as you want before moving on to your next destination.
— You have a temporary job: If you’re filling a temporary position, a short-term lease gives you the flexibility to move on to the next opportunity without a long-term commitment to one location.
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How Do You Give Notice for a Month-to-Month Lease?
Every state has laws regarding how much time a tenant or landlord must give before terminating the rental contract. Your contract should tell you how much time you need to give before moving out as well as the move-out process.
“Month-to-month leases can vary from state to state so it’s important to be aware of the pros and cons where the rental is located,” explains Alexandra Alvarado, director of marketing and education at the American Apartment Owners Association. “For example, the notice of termination period for a month-to-month lease is 30 to 90 days for most states, but some states have ‘just cause’ laws as well.”
“Typically, ‘just cause’ means the landlord must renew the lease unless the tenant has intentionally damaged the unit, not paid rent or broken the lease in some material way,” Alvarado adds. “It’s important to also research whether your state has exemptions for ‘just cause’ so you can ensure the law applies to you.”
For example, Alvarado says most rental units in California require just cause and a 60-day notice if the tenant has resided in the rental unit for more than a year. However, if the tenant resided in the rental for less than a year, there’s no need for just cause, and the notice is only 30 days.
Advantages of a Month-to-Month Lease
Here are four benefits of a month-to-month lease:
The end date is flexible. Because there’s no end date, a monthly rental agreement gives tenants and landlords extra flexibility. You can decide the most convenient move-out date as long as you give proper notice. If you’ve got any major life changes coming up in the next year — say you’re transferring to a new city, getting married or planning to purchase a home — the month-to-month option gives you the flexibility you need for those situations.
There’s no penalty for breaking the lease. There’s no penalty for ending the lease as long as you give enough notice, as stated in your lease agreement. Terminating a standard lease could cost you thousands of dollars. In some cases, your landlord could sue you for rent for the entire lease term and you’ll also be responsible for paying court fees.
You can convert to a long-term lease. If you decide to do a month-to-month lease but end up being able to stay, you can sometimes convert it to a long-term lease with relative ease.
It often comes with furniture. Suzanne Miller, president and CEO of Empire State Properties, a boutique real estate firm in midtown Manhattan, specializes in short-term furnished rentals. “We furnish the apartment and we usually include utilities,” she says. “We make it one fee so the furniture is included, utilities are included and the move-in fee.”
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Disadvantages of a Month-to-Month Lease
Before you start negotiating your new month-to-month contract, consider these four downsides that may make the arrangement a less desirable option:
You’ll likely pay more. “People usually pay higher rent,” Miller explains. “Usually 20% higher on a short-term basis.” Tenants often pay more for a month-to-month lease because landlords need to offset the higher risk for a vacancy in the near future.
The landlord can change terms and rent. “Another key difference is the landlord can typically change terms and raise the rent more frequently on a month-to-month lease, but they must give written notice to their tenants before doing so, and that notice can range anywhere from 21 to 90 days depending on the state,” Alvarado says.
But some states limit the number of increases per year.
“Colorado only allows one increase per year for all tenancies. And some states will not allow the landlord to make any substantial changes to a month-to-month lease unless the tenant consents to it in writing,” Alvarado adds.
There’s more wear and tear. According to Miller, units with month-to-month arrangements have more wear and tear on the apartments. “The biggest drawback is the wear and tear on the apartment and more people coming in and out,” Miller says.
The landlord can end the lease, too. You may be able to end your lease and move out within 30 days but your landlord has the same freedom. This means you’ll need to find a new place to live, pack your things and move within that period. This can be stressful, especially if you’re busy or tight on money.
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What Is a Month-to-Month Lease? originally appeared on usnews.com
Update 06/28/23: This story was published at an earlier date and has been updated with new information.
