What to Know About Month-to-Month Lease Agreements

Are you interested in renting an apartment but don’t want to commit to a long-term lease? If so, you may want to consider a short term lease. This type of rental agreement is called a month-to-month lease. A monthly rental agreement could offer the ideal flexible solution for short term rental and other situations. This type of agreement is also often referred to as an at will rental agreement, but there is a subtle difference between the two.

From a tenant’s perspective, a month-to-month lease can really be appealing when you know you’re going to be to buy a house in the near future. Short-term rental offers the possibility of vacating a property fairly quickly. Let’s take a look at what you need to know about this type of rental agreement.

What is a monthly lease?

discuss the monthly rental contract

This is usually a short-term rental agreement that allows the owner or tenant to end the arrangement at any time, hence the month-to-month term. As mentioned, the subtle difference between a month-to-month lease and an unlimited lease is that a month-to-month lease usually has a signed contract with specific lease terms.

On the other hand, an unlimited lease is also a monthly lease, but can exist without a written contract. The perfect example would be when a month-to-month lease expires, but neither the tenant nor the landlord has done anything about the rental status.

The rental agreement will continue until the landlord or tenant decides to terminate. This means that there is no rental term to which the tenant commits and payment details continue as agreed in the monthly lease.

A monthly lease is sometimes also called “real estate at will” or simply an “at will” agreement. So if you hear these terms they mean the same thing. Whatever name is used for this type of arrangement, they will need to follow state laws which may vary. However, no matter what state you are in, there are federal laws to prevent discrimination.

If you are a tenant and you have not signed a lease agreement specifying the date of your departure, this is an unlimited rental. Often this will be a verbal agreement, although you may have written terms that may include the rental price, as long as the rental period is not indicated.

The advantages of using a monthly lease

monthly payment

This type of short-term contract is more beneficial when a tenant and landlord are looking for this type of flexibility, as it gives them the ability to end the tenancy without worrying about legal contracts.

The all-you-can-eat rental agreement can help define the situation between landlord and tenant when there is no formal written lease agreement. So if a lease has expired, been broken in some way, or was never created in the first place, this type of verbal arrangement could be used.

Although monthly agreements can be created at the start of a new rental agreement, they are more normally used when both parties get to know each other. It can mean a former tenant or even a family member, so there is some trust between the parties.

The disadvantages of a monthly lease

The advantage of this type of arrangement can also be a disadvantage. This means uncertainty for tenants, who can never be sure that they will still be in the house in a month, or sometimes less. As a tenant, you could probably negotiate the price of rent and additional charges when signing a longer contract, which is not possible with a month-to-month lease.

For the owner, this means that his rental income will not be stable. But for both parties, the absence of a formal rental agreement could mean that they suddenly find that the situation changes significantly and without notice.

How does a monthly lease work in practice?

verbal agreement

When a tenant is allowed to live in an apartment or house with or without signing a contract, they will use an agreement at will. As long as there is no contract stipulating the duration of the rental, this agreement will be in place.

This type of lease can also be effective when:

  • There is only a verbal agreement between the owner and the tenant.
  • There is a monthly lease with a written contract.
  • The tenant’s month-to-month lease expired and he did not sign a new one.

Is a monthly lease the same as a permanent tenant?

As mentioned earlier, a month-to-month lease and an all-you-can-eat lease are similar but not exactly the same, so they shouldn’t be used interchangeably (although some people do).

In contrast, a remaining tenant is a person who remains in the property after the end of their monthly rental agreement. They might not have the owner’s permission to stay on the property. But if they continue to pay rent and the landlord agrees, they still have the right to occupy the accommodation. It will be considered as an unlimited rental from that point on.

If the landlord does not accept rent payments from the remaining tenant, the situation will be considered a trespass. This means that tenants have to vacate the house or face legal consequences when the landlord begins eviction proceedings.

End a monthly rental contract

monthly rental

While this type of agreement is very flexible, it is not without rules when a party wants to end the arrangement. Tenants must notify their landlord when considering moving. Likewise, owners must inform tenants in advance of their desire to terminate the contract.

Even where there are no written rules agreed upon between landlord and tenant regarding the termination of the arrangement, a 30-day notice is standard. Whichever party decides to end the deal, they must give 30 days notice. It is normally expected to give this notice in writing, although no reason should be given for terminating the agreement.

However, there are a few examples where this type of agreement can be terminated without notice. Examples of short-term notice include if the owner decides to sell the property to a family member or someone else who will speed up the process. Normally it would take longer to sell the property, but there are cases where the process can be sudden.

Sometimes owners are allowed to give shorter notice. If the tenant is in arrears with payment or has caused considerable damage to the house, the landlord has the right to demand that the tenant move out with less than 30 days’ notice.

Standard legal protections for tenants at will

Even without a written lease, the landlord must ensure that the house is a safe environment for the tenant. They are also required to provide notice to the tenant if they must enter the property for any reason.

The tenant must also respect certain rules. This includes adhering to the rent payment schedule, as well as adhering to any other rules agreed to by the landlord. The tenant will also be responsible for any damage to the house beyond normal wear and tear.

Final thoughts

All-you-can-eat or monthly rentals are not for everyone, but in some circumstances can benefit both tenants and landlords. Hopefully, now you will know which one to choose when looking for your next place to rent.

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