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 explores the pros and cons of a month-to-month lease and how this type of lease works.
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.
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.
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.
Weighing the pros and cons of different types of leases is often challenging. A qualified, local landlord-tenant attorney can review lease agreements and counsel you on your choices.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.