The Benefits of a Month-to-Month Lease

Fixed Term vs. Month-to-Month Leases

In today's rental market, the most popular type of agreement is a fixed-term lease that can have a duration of a year or more depending on what is agreed upon between the landlord and tenant.

Fixed-term lease agreements are popular for landlords because they provide a measure of financial consistency by bringing in constant rent. They are popular for tenants because these fixed-term lease agreements provide security by locking in the rent amount for the term of the lease as well as ensuring they cannot be evicted as long as they pay their rent on time. While fixed-term leases can be very beneficial for tenants and landlords seeking financial and residential security, a month-to-month lease agreement that is not for a fixed term can be beneficial to landlords and tenants who are seeking flexibility.

Benefits of a Month-to-Month Lease for Both Tenant and Landlord

There are many situations that can arise in which a fixed-term lease might not be the best option, and when these situations arise, the month-to-month lease can be an excellent solution. There are tenants that must constantly move from location to location as required by their employer, and for them, a month-to-month lease offers a great deal more flexibility over a fixed-term lease.

Another type of tenant that finds month-to-month leases beneficial are those who have recently sold their home and have not yet found their new residence.

Having the ability to rent a temporary residence while they find their new home is invaluable, and it ensures that there will be no legal or financial issues associated with having to break a long-term lease.

This type of agreement is also beneficial for those who want to get to know a neighborhood or a landlord prior to committing to a long-term lease.

The month-to-month lease can also be beneficial for landlords depending on their specific property situation. There are many properties that are in less than desirable locations, and these properties tend to attract lower income tenants who might have more difficulty being consistent with rent payments. When this occurs, a month-to-month lease gives a landlord much more flexibility in removing non-paying tenants since the lease can be terminated for any cause as long as a 30-day notice is given. It also makes it much easier for the landlord to increase rents when the market dictates rather than wait for a long-term lease to expire before applying the increase. Other locations that benefit from month-to-month leases are vacation properties and properties located in transient prone areas such as college towns.

How a Month-to-Month Lease Works

The month-to-month lease is structured so that the contract automatically renews each month until one of the parties gives a 30-day notice that they plan to end the lease. Many times, it is possible for tenants to negotiate a clause in the monthly lease that guarantees the rental amount will not be increased for a certain period of time. This gives the tenant a measure of security that normally is found only in fixed-term leases.

Landlords might also find this advantageous because that measure of security might keep a good tenant in the property for longer periods, and if it is located in an area where rent amounts fluctuate up and down, it ensures a static amount that the landlord can depend upon. While the month-to-month lease is not a perfect fit for all situations, there are definitely many situations for the landlord and tenant where its flexible nature can benefit both.

How to Create a Month-to-Month Lease Agreement

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