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 kind of rental contract is known as a month-to-month lease. A month-to-month lease agreement could offer the ideal flexible solution for a short-term rental and other situations. This type of agreement is also often referred to as a tenancy-at-will agreement, but there is a subtle difference between the two.
From a tenant’s perspective, a month-to-month lease can really be attractive when you know you’re going to be buying a house in the near future. The shorter-term tenancy provides the flexibility to exit from a property rather quickly. Let’s take a look at the things you need to know about this type of rental agreement.
What Is a Month-to-Month Lease?
This is typically a short-term rental agreement that allows the landlord or the tenant to end the arrangement at any time — hence the term month-to-month. As mentioned, the subtle difference between a month-to-month lease and a tenancy-at-will is that a month-to-month lease typically has an executed contract with specific lease terms.
On the other hand, a tenancy-at-will 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 a tenant nor landlord has done anything about the rental status.
The tenancy arrangement will continue until either the landlord or tenant decides to terminate. This means that there is no rental duration that the tenant is committed to, and payment details continue as agreed in the month-to-month lease.
A month-to-month lease is sometimes also called “estate at will,” or just simply an “at-will” agreement. So, if you hear those terms, they mean the same thing. Whatever name is used for this type of arrangement, they will need to follow state laws which can vary. However, whichever state you are located in, there are federal laws to prevent discrimination.
If you are a tenant who has not signed a lease agreement stating when you will move out, this is a tenancy at will arrangement. This will often be a verbal agreement, though you can have some written terms that could include the rental price, just as long as the rental period isn’t stated.
The Benefits of Using a Month-to-Month Lease
This type of short-term agreement is most beneficial when both a renter and landlord seek this type of flexibility, because it gives them the option of ending the rental without worrying about legal contracts.
The tenancy-at-will arrangement can help set out the situation between the landlord and the renter when there is no official written lease agreement. So, if a lease has expired, has been broken in some way, or if it was never created in the first place, this type of verbal arrangement could be used.
While month-to-month arrangements can be created at the start of a new rental arrangement, they are more normally used when both parties know each other. This might mean a previous tenant or even a family member, so there is some trust between the parties.
The Downsides of a Month-to-Month Lease
The advantage of this type of arrangement can also be a drawback. It does mean uncertainty for tenants, who can never be sure if they will still be in the home in a month, or sometimes less. As a tenant, you probably could negotiate the rent price and additional costs when signing a longer agreement, which is not a possibility with a month-to-month lease.
For the landlord, it means that their rental income isn’t going to be stable. But for both parties, a lack of formal lease agreement could mean they suddenly find the situation changes significantly and without much notice.
How Does a Month-to-Month Lease Work in Practice?
When a tenant is permitted to live in an apartment or house with or without signing a contract, they will be using an at-will agreement. As long as there isn’t a contract that states the duration of the tenancy, this agreement will be in place.
This type of tenancy arrangement can also be effective when:
- There is only a verbal agreement between the landlord and the renter.
- There is a month-to-month lease with a written contract.
- The renter’s month-to-month lease has expired and they haven’t signed a new one.
Is a Month-to-Month Lease the Same as a Holdover Tenant?
As previously mentioned, a month-to-month lease and a tenancy-at-will are similar but not exactly the same, so they shouldn’t be used interchangeably (although some people do).
In contrast, a holdover tenant is someone who remains in the property after their month-to-month lease agreement ends. They might not have permission from the landlord to remain on the property. But if they continue to pay rent and the landlord accepts, they still have a legal right to occupy the home. It shall be considered a tenancy-at-will from this point forward.
If the landlord doesn’t accept rent payments from the holdover tenant, the situation will be considered trespassing. This means that tenants have to move out of the home or face legal consequences when the landlord starts eviction proceedings.
Ending a Month-to-Month Lease Agreement
Though this type of agreement is very flexible, it isn’t without its rules when one party wants to end the arrangement. Tenants should give their landlord notice when they plan to move out. Likewise, landlords will have to inform tenants in advance of their wish to terminate the agreement.
Even when there aren’t any written agreed rules between the landlord and the tenant over ending the arrangement, 30 days notification is standard. Whichever side decides they want to terminate the agreement, they need to give 30 days’ notice. It is normally expected to give this notice in writing, though no reason must be given to terminate the agreement.
However, there are a few examples where this type of agreement can be ended without giving notification. Short notice examples include if the landlord decides to sell the property to a family member or someone else who will hurry the process along. Normally, selling the property would take longer, but there are instances when the process can be sudden.
Sometimes, landlords are allowed to give shorter notice. If the renter is in arrears or if they have caused considerable damage to the home, the landlord is within their rights to require the tenant to move out with less than 30 days’ notice.
Standard Legal Protections for Tenants at Will
Even without a written lease, the landlord has to make sure the home is a safe living environment for the renter. They’re also required to provide notice to the tenant if they need to enter the property for whatever reason.
The tenant also needs to follow some rules. This includes keeping up with the rent payment schedule, as well as sticking to any of the other agreed landlord rules. The tenant will also be responsible for any damage to the home over and above normal wear and tear.
Tenancy-at-will or month-to-month rental agreements are not for everyone but, in certain circumstances, can benefit both tenants and landlords. Hopefully, now you’ll know which one to choose for when looking for your next place to rent.