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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:
MTMs for Tenants
MTMs for Landlords
Here is a breakdown of when you can legally evict a tenant:
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, it's 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
Cons of Opting for a MTM
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.
Our team at FormSwift wanted to determine which major cities are the best and worst to have a month-to-month lease. We created a ranking of the top 20 cities by evenly weighting the following factors into a final score out of 100: median rent of a two-bedroom apartment in the city, month-to-month rent change in the city, average cost of living in the state, and hourly wage required to afford a two-bedroom apartment in the state.
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