A month-to-month lease agreement is a type of lease agreement used by landlords who rent out their property on a monthly basis.
A month-to-month lease agreement is used by landlords who rent out their property on a monthly basis. These types of agreements may be used for temporary housing, college apartments, or long-term tenants who have lived in a particular rental for a number of years. They do not have a specific time period and either party can cancel it, usually with a month’s notice. As opposed to a long-term lease agreement, a MTM lease enables either party--tenant or landlord--to alter or terminate the lease on a monthly basis. Changes to a MTM lease typically require a 30 day notice. If no changes are made, MTMs automatically renew at the beginning of each month and continue to do so until either party terminates the MTM lease.
Like other rental contracts, this agreement should include responsibilities for both parties, the landlord and the tenant. The lease should include financial information, such as rent amount, what utilities the renter is responsible for, repair fees, and any other expenses. It should additionally outline policies regarding pets, number of occupants, parking, and more. Both parties will need to review and sign the lease before it is officially recognized.
A fixed-term lease is the most common type of lease agreement. Here, the lessee agrees to stay in the residence and pay rent for a fixed period of time (as indicated in the contract). These forms of agreements do not allow the tenant to end the lease before the fixed term without significant financial loss or termination fees. Although these repercussions do have limitations, they are not as flexible as month to month leases.
A month to month lease allows the flexibility of both parties to alter or terminate the lease with a 30 day notice with no repercussions. Although this type of lease is often ideal for those who may want more flexibility without the chains of a long term lease, it does come with its own share of drawbacks. MTM leases give landlords the flexibility to raise rent, or evict tenants with the same 30 day notice.
Whether you are a tenant or landlord, there are many advantages and disadvantages to both MTMs and fixed-term leases. Let’s take a look at some of those:
Pros:
Flexibility: If you are looking to “try out” a neighborhood and are not ready to commit to it long-term, or if you think you may move within 6-12 months (either to purchase or to leave the area), a MTM might make sense for you.
No Penalty: MTMs charge no penalty for breaking the lease. A MTM comes with an understanding that, at some point, either the tenant or landlord will break the lease.
You can usually switch: Often, tenants with a MTM agreement can switch to a long-term lease if they choose. So if your situation changes and you want more stability in your current apartment, you can typically convert your MTM to a fixed-term lease.
Furnished: It is not uncommon for MTM units to come furnished. Therefore, if you are not interested in buying an apartment’s worth of furniture, a MTM might make sense.
Cons:
Cost: MTMs, especially those that did not begin as a long-term lease, are often more expensive. Landlords typically offer lower rents to long-term lessees because they commit for an extended term. With a MTM, you may miss out on signing incentives like rent concessions or other benefits that are only available to long-term lessees.
Instability: In an MTM, your landlord can increase your rent each month, and without much notice, depending on your area. Similarly, your landlord can terminate your contract and evict you, generally without cause, with little notice (30-60 days). Further, during that period, the landlord can show the home to prospective tenants, which is a big hassle.
A month-to-month rental agreement is a written contract for a short-term tenancy that usually lasts for thirty days and, in contrast to a fixed-term, standard lease, is characterized by an automatic renewal unless the tenant or landlord gives notice that the agreement will not be renewed. The agreement may be changed or terminated by either party; acceptable notice must be given to alter or end the rental agreement -- usually thirty days, although state and local law varies. A month-to-month rental agreement is an arrangement that provides flexibility for the tenant and landlord, and the security deposit required is generally less than the security deposit demanded for a fixed-term lease.
Some fixed-term, standard leases include a month-to-month option when the original agreement terminates: a Holding Over provision that states the lease will continue on a month-to-month basis after the lease expires. If the original written lease includes a Holding Over clause, a new, separate month-to-month rental agreement is not necessary. The original lease generally delineates the terms of the month-to-month tenancy, including a possible premium above the rent amount listed in the original lease. The terms of a month-to-month rental agreement may be affected by local law.
A month-to-month rental agreement governs the entire rental relationship between the tenant and landlord, including the amount of rent, the rent due date and method of payment, how many people may live in the apartment, subletting rules, the rights and duties of each party, and the consequences should either party not meet their obligations.
When a person rents an apartment or house in which they intend to live, they generally sign a lease. A residential lease is a legally binding contract between tenant and landlord; it includes the specific rights and obligations of both parties. Subtenants can be included in the residential lease.
A standard lease is a legally binding contract between a tenant and a landlord and includes the specific rights and obligations of both parties; the tenant agrees to stay and pay rent for the period specified in the written contract. Subtenants can be included in the lease. A standard lease is generally for twelve or eighteen months; six-month and two-year leases, however, are options. During the term of a standard lease, the landlord may not alter the lease terms, raise the rent, or terminate the lease, as long as the tenant is in compliance with the terms of the lease.
Fixed-term, standard leases universally include the following provisions governing tenant and landlord rights and obligations:
Names of All Parties
Description of the Rental Property
Term of the Lease
Amount of Rent
Amount of Security Deposit
Late Fees (if any)
Maintenance Duties
Options to Renew
Termination Notice Requirements
When Landlord May Enter the Rental Property
Pet Policies
Although state law varies, standard leases may NOT contain certain provisions, including:
Exclusion of Tenants based on Race, Color, National Origin, or Sex.
Prohibition of Children (unless the property is a senior housing facility)
Tenant Waiver of Right to Sue Landlord
Tenant Waiver of Right to Refund of Security Deposit
Tenants who break a fixed-term, standard lease will usually lose their security deposit and any pre-paid rent for the final month of the lease. In addition, they may deemed liable for some or all of the amount of time and rent remaining on their standard lease; applicable law, however, generally limits this type of liability. The tenant is responsible for the rent until the landlord finds a replacement tenant or a period of time considered reasonable for finding a new tenant elapses.
When a fixed-term, standard lease terminates, a tenant may move out, continue to pay rent as a month-to-month tenant, or sign a new fixed-term, standard lease. If a tenant continues to pay rent after a lease terminates, in most states the terms of the original lease will extend to and govern a month-to-month tenancy. The landlord may only change the terms of the tenancy after giving acceptable notice to the tenant; thirty days notice is required in most states.
In some states, if a tenant continues to pay rent after a fixed-term, standard lease has terminated and the landlord accepts the rent, the lease is automatically renewed for the same term as the original lease and includes the same clauses.
In the alternative, a tenant and landlord may agree to extend the tenancy by signing a new fixed-term, standard lease in which the landlord can alter the terms of the original standard lease and increase the rent. When the tenant agrees to the revised terms, the new standard lease governs the tenancy.
A sublet clause in a fixed-term, standard lease or a month-to-month rental agreement states that the landlord’s permission is required prior to a sublet. The landlord, however, cannot refuse to give consent to a reasonable request to sublet.
A month-to-month rental agreement usually lasts for thirty days and, in contrast to a fixed-term, standard lease, is characterized by an automatic renewal unless the tenant or landlord gives notice that the agreement will not be renewed.
In most states, month-to-month rental agreements generally require the tenant or landlord to give a written, thirty-day notice of termination, but this provision can vary according to local law. A tenant is generally allowed to give notice of termination at any point during the month. If, however, the month-to-month rental agreement states that a tenant may only give such notice on a certain day of the month, the tenant must comply with that provision.
Sources:
See the following links for month-to-month rental agreement templates:
Month to month lease agreements work as follows:
The potential tenant completes a rental application. The rental application gathers certain personal, financial, and employment information. It also collects a previous rental history. It may also ask whether the potential tenant agrees to a background check or for the potential tenant to disclose whether they have been convicted of certain felonies. The potential tenant may also pay an application fee which covers the background check as well as the time the landlord takes to verify the potential tenant’s income, employment, and rental history.
The rental is shown. Sometimes, the rental unit is shown before the potential completes a rental application. However, some landlords will not show the unit until an application is completed. During this time, the potential tenant may decide if they want to continue with the process.
Security and pet deposits are disclosed and paid. Most states have a maximum amount that landlords may not exceed for security deposits. However, some states do not have this sort of limit. The landlord will disclose the amount of the security deposit and any pet deposit. If the landlord and potential tenant are moving forward, the potential tenant pays the deposits and gets a receipt for each deposit paid.
The lease and disclosures are created by the landlord. The landlord creates the month to month lease and attaches certain disclosures that are required by state and federal law.
The potential tenant reviews the terms of the lease and the disclosure forms. It’s important that the potential tenant takes the time to review the terms of the lease. This will help the potential tenant understand their obligations and rights as well as the obligations and rights of the landlord. Each state has laws related to leases. As a result, there may be certain clauses that are required or that have certain limitations. The potential tenant may also be required to perform certain actions, such as complete and return a move-in checklist (which may also be known as a walk-through sheet) to verify the conditions of the property.
The month to month lease is executed. If the terms in the lease are acceptable, the document is then executed by both the tenant and the landlord signing and dating it. After it is executed, provided that the deposits are paid, the tenant receives a move-in date and the keys to the rental unit.
How to end a month to month lease agreement. If either the tenant or the landlord wishes to end the month to month lease agreement, they must provide written notice to the other party. Typically, it requires 30 days of notice, but some states have specific notice requirements. The month to month lease may specify how much notice must be given as well as provide the notice address.
Here’s the information needed to create a month to month lease agreement:
Name the landlord, the tenant, and provide the address to the rental property. If the landlord has an agent, such as a property management company, they should be named. Every person who resides in the rental will be listed although not every person listed is necessarily liable for the paying the rent. The full address of the property should be listed, including the city, zip code, state, and county. These pieces of information may be shortened moving forward as “Landlord,” “Tenant,” and “Premises.”
The term of the lease. Since we are explaining how to create a month to month lease agreement, provide in the lease the date the lease begins and that it is a month to month lease. The amount of notice required to end the lease should also be included in this clause.
List the monthly payment. Next, include the amount of money the tenant must pay as rent each month. The date that the rent as due as well as how the rent may be paid should also be included. This clause may also explain whether the landlord charges a late fee as well as the amount of the fee. It should also explain whether the landlord charges a fee for insufficient funds as well as the amount of the charge.
Information about the security deposit paid. A month to month lease agreement includes a clause that documents how much was paid as a security deposit. It also explains the purpose of the security deposit: to cover certain damages caused by the tenant or their visitors. In some states, it is required of landlords to keep security deposits in an interest-bearing bank account; often, the law also requires the landlord to provide the name of the bank and the account number where the money is held. This clause may also state whether the tenant is allowed to use any of their security deposit as a payment toward or in full for the last month of rent.
What happens if the tenant defaults on the month to month lease agreement. A default means that the tenant did not adhere to at least one requirement present in the month to month lease agreement. This clause states how much notice the landlord is required to provide to the tenant to correct or cure the default.
Document the number of occupants allowed in the rental premises. This clause explains how many occupants are allowed in the rental property. It also states that more occupants require written permission from the landlord.
Whether the tenant may sublease the premises. This is also known as an Assignment clause. It explains whether the landlord allows the tenant to sublease the premises to another person.
Which utilities and services the tenant is required to pay. This clause explains which utilities and services, such as electricity and hot water, must be paid by the tenant. It may also state which utilities and services are paid by the landlord. If the utility meters are split, that must be explained to the tenant as well as the calculation for how the amounts are determined.
A clause about pets. This clause explains whether pets are allowed. If so, this clause will explain several important pieces of information. It may list how many pets are allowed, the types of pets allowed, and if there are weight restrictions. It may also explain whether there are certain pets that the tenant may not have on the property. The amount of pet deposit would also be listed.
What happens in the event the tenant abandons the premises. The Abandonment clause explains what the landlord will consider abandonment of the premises. This doesn’t mean that the tenant can’t take a two-week vacation. It means that the landlord needs notice if the tenant will not be present on the premises for more than a certain number of days. If the tenant does not provide notice, the landlord may consider the premises as abandoned especially if there is a substantial lack of personal property left on the premises.
Which laws govern the month to month lease and any disputes related to it. This clause explains which state laws will govern the month to month lease as well as any associated disputes.
A clause that governs the display of signs at the rental. This clause allows the landlord to play “For Sale,” “For Rent,” or even a “Vacancy” sign on the property or in the yard of the property for a certain amount of time before the tenant moves.
A clause that governs noise. A noise clause helps control the noise for the neighborhood or building. It designates that hours from which tenants may not make excessive noise or when certain activities may be performed, such as delivering or removing furniture.
A clause that explains where the tenant may park. Some properties have assigned parking. Some states have few parking states and may require paid parking passes. This clause explains whether the tenant has assigned parking or how many parking spaces they’re allowed to have. It may also explain where visitors may park.
A clause that explains any other terms and conditions. If there are certain terms and conditions for some or all of the terms of the lease, they are listed in this section.
A dated signature from the landlord and the tenant. Both the landlord and the tenant should sign and date the month to month lease.
If you want to learn more about state laws and regulations related to month to month leases, you can consult the website of a legal aid organization in the state where the property is located, check out this list of state laws on leases and rental agreements provided by FindLaw, or check out HUD.gov’s list of tenant rights organized by state.
Pros:
Flexibility: With a MTM, it is much easier to evict a tenant in the event they are late with rent payments, are not taking proper care of the unit, or are not following local codes and ordinances.
You can also raise rents more frequently as the rental market adjusts. Raising rents require only 30 or 60 days notice (depending on where you live), so as demand increases, you can more quickly respond by increasing rent and thereby maximize your profit.
Furthermore, if you are unsure about your future plans for your rental property, MTMs grant you the flexibility to act whenever you decide. Say, for example, you are considering selling or renovating the property. With a MTM, whenever you decide how you want to proceed, you can act quickly, rather than having to wait months for a long-term lease to expire.
Cons:
Flexibility (for tenants): On the one hand, the flexibility of a MTM allows you greater flexibility to adjust rent and choose tenants. On the other hand, it also affords greater flexibility to tenants to leave at any point. Therefore, MTMs increase your opportunity to maximize profit but also increase the possibility your unit remains vacant (and therefore does not generate rental revenue) for extended periods. This can function as a sort of check and balance on rental increases. Regardless of what your tenant can afford, if you are constantly raising rents, they’re likely to vacate.
Eviction: In theory, a MTM gives you greater authority to evict undesired tenants. However, depending on where you live, there are generally still tenants rights laws you have to abide by, regardless of the term of a rental agreement. These laws outline when you can, and cannot, evict a tenant. Therefore, some believe the eviction process may not be any easier with MTMs.
Here is a breakdown of when you can legally evict a tenant:
Non-payment of rent: in this scenario a landlord must initiate a formal eviction process whether the tenant is in a MTM or long-term lease.
Property Damage: Both MTMs and long-term leases have language that permits eviction in the event the property is damaged.
Criminal/Police Issues: Most courts accept a police report as a valid reason for eviction.
Neighbor conflict: if your tenant’s actions prompt a neighbor to call the police, and they have a valid reason for doing so, the landlord often has the ability to evict, regardless of the lease term.
Pros:
Tax Deductions: Homeowners can deduct, up to a certain amount, property taxes and their mortgage interest from their taxable income.
Remodeling Freedom: As a homeowner, you can do whatever you want to your house (so long as it complies with local zoning and building laws), without permission. Renovations and remodeling, moreover, typically increase the value of a house.
Equity: Although there have been a few high-profile housing market collapses (e.g. 2008), on the whole and over the long-term housing is usually a good investment. As an owner, therefore, you are likely to accrue significant equity through homeownership.
Cons:
Expenses: Sure you can deduct the mortgage interest and property taxes, but you still have to pay them each year, which amounts to thousands of dollars renters simply are not on the hook for. Additionally, there are significant up front costs--closing costs, inspector’s fees, etc.--you likely will not recover in equity for several years. Therefore, if you plan to live in an area for a short time, purchasing may not be the best option.
Maintenance: As a homeowner you, rather than a landlord, is responsible for all maintenance and repairs to your home.
Pros:
Flexibility: Renting, especially with a MTM agreement, affords you the flexibility to move at will and with minimal notice and expense.
Free maintenance: If something breaks in a rental, your landlord is responsible for covering the cost of repairs, scheduling service, etc.
Cons:
Cannot personalize the space: Yes, you can furnish the domicile as you choose, but you cannot renovate, upgrade, or even paint without the permission of your landlord.
No Equity: Any equity accrued in the domicile while you live there is the landlord’s, not yours. Additionally, unlike mortgage payments, you will never recoup any of your rent money.
No tax breaks: Unlike mortgage interest, your rental payments are not tax deductible.
Here is our guide to month to month lease agreements (MTMs). We cover the basics of a MTM, compare them to long-term lease agreements, and offer a list of pros and cons (for both landlords and tenants) for each. We also cover the pros and cons of a MTM versus purchasing a home. We hope this guide helps you diagnose whether or not a MTM is right for you.
This is generally the first section of the month-to-month lease agreement part should disclose the full legal names of the landlord and tenant, as well as the address of the apartment in question, the name and address of the apartment management company, and everybody's contact information.
This section should specify the month-to-month basis of the lease, as well as name rent amount. It should also detail the grounds on which the lease may be terminated, both by the landlord and the tenant. If lease renewal is an option, its terms should be also be explained in this section.
Pretty self-explanatory - this section should name the security deposit, as well as the amounts of any other applicable deposits (such as a pet deposit). It should also detail any fees charged for late or returned payments.
The amount of rent due each month should be clearly described in the contract, as well as the date the rent is due.
Not all apartments allow pets. Some tenants run into issues because they live in an apartment for a period of time, and then decide to get a pet. However, before you decide to get a pet (if you don’t already have one) be sure that your lease agreement highlights the parameters of having a pet in the home. Sometimes a “pet deposit” is required to cover any additional cleaning fees, and other times rent may increase to accommodate any additional wear and tear to the unit.
This clause should outline how any damage to the property will be handled.
This will describe what privileges the tenant will have on the property. This should highlight which parking spaces (if any) the tenant will use, if he or she will have any on-site storage units, and whether or not the tenant can have extended guests or sublets.
The month-to-month lease agreement should include subsections on any of the following that apply: damage fees, utilities terms, landlord's right of entry, and any required renters insurance.
Although opting for a month to month lease comes with its share of pros and cons, having one gives flexibility to those who may have taken a temporary job, or may be working in the area on contract for a period of time, or for those who simply may not know when they want to move.
Renters typically opt for a month to month lease because of its flexibility. Many on a month to month lease may only wish to rent an apartment because their job is only temporary, or they are under contract to work in a particular city for a period of time. Rather than spending money on a costly hotel, that may have limited amenities such as a stove or an actual bedroom, many will opt for a month to month lease. For others who may be looking to purchase a home but do not know exactly when, a month to month lease gives them the flexibility to look for homes on their own schedule, without worrying about feeling rushed to purchase something before their lease ends.
Pros of Opting for a MTM
One of the highlights of signing a month to month lease is the flexible end date. Renters have the flexibility to end their lease in 30 days with no repercussions. Month to month leases automatically renew at the beginning of each month and the lessee is not locked into a long-term stay.
Cons of Opting for a MTM
One of the main drawbacks of opting for a MTM lease is the fluctuating rent prices and the possibility of an unexpected lease end. With fixed term leases, your rent is locked in for the duration of that lease (unless otherwise described in the lease). However with a MTM, the landlord may decide to raise the rent month after month, with the new rent amount being due 30 days after the initial notice.
Additionally, if there is no rent control over the property, the landlord can raise the rent how he or she chooses.
Although some units may be advertised as MTM-friendly, your best bet is to ask the landlord if they are open to a MTM agreement.
If possible, offer to pay more than the advertised monthly rent. This can serve as an attractive compromise for the owner, who may be willing to sacrifice the security of a long-term agreement for more money each month.
You should also look for rentals that have been on the market for a long time. Landlords tied to these units are more likely to negotiate in order to fill their empty property.
Every lease should be detailed in writing and signed by both the landlord and tenant to ensure it is legally binding. The exception to this is a Holding Over clause, which stipulates a long-term lease will continue on a MTM basis after the lease expires. In this scenario, you do not need to sign another document once the lease converts to a MTM.
The Holding Over clause protects landlords in the event a tenant does not vacate at the conclusion of the fixed-term. In this case, which is very common, the lease converts to a month to month lease rather than becoming void and requiring a new contract.
Notice to terminate a MTM lease agreement varies by state, but typically both tenant and landlord must provide 30 days notice in order to terminate a MTM agreement.
MTM agreements are an attractive rental option...for some. As we’ve outlined in this guide, whether or not a MTM is right for you depends on a host of factors. We hope this guide helps you get a better sense of your own needs and priorities regarding a rental contract.
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