What Is the Difference Between a Month-To-Month Lease and a Fixed-Term Lease?

In month-to-month leases or short-term leases, the lease renews every month. In a fixed-term or long-term lease, the lease renews at the end of the lease. Many residential leases run for one year and are often renewed annually.

Depending on your needs as a renter, you may prefer a month-to-month tenancy or a fixed-term lease. Each has advantages and disadvantages. This article compares month-to-month leases and fixed-term leases. Learn the pros and cons of each type and how they work. 

Before you sign a lease, make sure you understand all its terms. A lease is a legal contract, and it’s natural to feel overwhelmed or confused by some of the legal terminology and language used. If you need help reviewing a lease agreement, consult a local landlord-tenant attorney. You should feel confident and comfortable with its terms before signing.

Why Choose a Month-To-Month Lease?

Month-to-month leases are an attractive option for anyone with short-term rental needs. This type of lease offers the tenant great flexibility since they will not pay a penalty or lose a deposit if they want to move.

It also offers the landlord similar flexibility, such as rental income for a short period. An example of a month-to-month lease is a short-term condo rental in Florida during winter. In this type of rental, the property owner gets income during the off-season, and their tenants get a break from harsh winters.

Month-To-Month Rental Agreements

Often, the landlord and renter agree to the terms of the lease orally, but a month-to-month lease agreement is preferable. A written lease is a legal document, and it offers more protection to all parties to the lease. In a dispute, the written lease should help resolve the dispute.

A written month-to-month rental agreement should include:

• Names of all parties to the lease
• The location of the rental unit or rental property
• The monthly rent amount
• Where to make the monthly rent payment
• Amount of security deposit, if required
• Amount of time to give proper notice to end or change rental terms

Ideally, both should give a 30-day notice of:

• Rent increases
• End date for the lease
• An eviction notice

Although month-to-month leases don’t offer the same security as a long-term lease, they work for some people.

Fixed-Term Leases

A fixed-term lease is a rental agreement where the renter pays rent for the period indicated in the written contract.

Renters who break long-term lease agreements may face:

• Loss of their security deposit
• Loss of their pre-paid last month’s rent
• Liability for any remaining rent under the lease agreement
• Reputational harm, like a bad rental reference

State law may limit the tenant’s liability if they break a lease agreement. The landlord or property manager must often attempt to find a new tenant before demanding any remaining rent.

Breaking a lease—even for a legitimate reason—can negatively impact your rental record. Make sure you follow this process correctly, and some situations benefit from an attorney’s expertise. Find local legal help.

Benefits of Fixed-Term Leases

Some benefits of a long-term rental commitment include:

• No arbitrary change to the terms of the lease
• No arbitrary rent increases
• A fixed end date
• The ability to sublet, if allowed

Month-to-month agreements may allow for more flexibility, but a fixed-term lease is the best option for tenants with no plans to move for at least a year.

Get Legal Help With a Lease Agreement

Weighing the pros and cons of different types of leases is often challenging. A qualified, local landlord-tenant attorney can review a lease agreement before you sign it, helping ensure that you understand the terms and language used. Most apartment leases last at least a year, and extra due diligence now can prevent major issues later.

FindLaw’s directory of landlord-tenant lawyers can get you started. Enter your city or ZIP code for a list of legal professionals in your area. Because state and local laws are relevant, your attorney should be licensed in the state where the rental unit is. Your search results will also show important details about prospective attorneys, like ratings, areas of practice, and whether they offer free consultations.