When renting out a property, you will enter into an agreement between the landlord and the tenant called a lease. A lease dictates the requirements for renting and can be done on a yearly or month-to-month basis. This is done using a Month to Month Lease.
A month-to-month lease agreement is a legal document that allows tenancy on a month-to-month basis rather than a typical one-year rental agreement. While each landlord will have its own format, there are basic details that will need to be on the lease agreement:
- Property – details the location of the house, apartment, or room that is being rented.
- Landlord – also referred to as the “Lessor,” this gives the contact details of the property’s owner or manager.
- Tenant – also referred to as the “Lessee,” this gives the details of the person who is agreeing to rent the property.
- Rent – states how much the tenant will be paying the landlord each month.
- Eviction Notice Process – this details how much time the landlord must give the tenant before they terminate the lease agreement.
With a traditional lease agreement, the terms of the lease are also included in the document. However, with a month-to-month lease agreement, the landlord is not required to give a specified tenancy period. There are other details that you may wish to add to your agreement that we will look at below.
You can download one of our free templates or samples to get a better idea of what a Month to Month Lease looks like.
How to Create a Month-to-Month Lease Agreement
Following is a simple step by step guide to creating a month-to-month rental agreement:
Step 1: Identifying the tenant and landlord
The start of the month-to-month lease agreement needs to have both the tenant’s and landlord’s details. In most cases, just the names will suffice, but it’s best to have the contact details of both the tenant and landlord on the document.
Step 2: Premise details
This is just the full address of the property or room that is being rented.
Step 3: Rent
This is where you will document the monthly rental amount. It’s a good idea to check the current housing market in your area to be sure you are offering a rate that is appealing to renters and financially sound for yourself.
Step 4: Guarantor
If the tenant you are renting to has a bad credit score, you can ask that a third-party, such as a parent, act as a guarantor. This would make them liable for any rent or charges that are unpaid.
Step 5: Security deposit
If you choose to ask for a security deposit, be sure to state how much is required. Usually, a month’s rent in advance is required by most states.
Step 6: Eviction Process
While a section that specifies the term of the lease is not used with a month-to-month lease agreement, you should still state how much time in advance you will give a tenant before terminating a lease. This will also vary depending on the state you are in.
Benefits of Month-to-Month Lease Agreements
Following are some benefits of having a month-to-month lease agreement:
There are some benefits to having a month-to-month lease agreement, as well as some downsides.
Finding reliable tenants: A month-to-month option gives a landlord the ability to have a trial period and vet tenants better. They can then choose to offer a long-term lease if they feel the tenant is reliable.
Eviction process: Where giving written notice of termination is concerned, the time frame varies from state to state. In most states, a 30-day notice is required. This means that, as a landlord, you will have to go through the same process of eviction as you would for a fixed-term lease agreement and may end up having rent unpaid.
Freedom to walk away: A month-to-month lease agreement also gives those new to property management a chance to see if it’s something they want to continue with. There are no terms that you are bound to as a landlord, which means having the ability to cut any losses should you find renting your property not financially feasible over time.
Gives financial flexibility: Another benefit of using a month-to-month lease agreement is that you are able to quickly adapt to housing market changes. Most states require that a landlord give their tenants one to two months’ notice when raising the rent. A month-to-month lease agreement allows you to do this at a faster rate than you would be able to with a yearly lease.
A month-to-month lease agreement option has pros and cons for tenants as well.
Flexibility: With a month-to-month lease option, tenants have a bit more flexibility with a housing situation that is less restrictive. It gives them a chance to test the waters with a new rental to help them decide if they want to commit to a longer-term agreement. Also, most monthly rental properties come furnished, allowing the renter to live minimalistic, making it a great option for those who move around a lot or for college students.
Terminating the lease: Generally, a month-to-month lease agreement will renew each month. To break the lease, all that is required is that you tell the landlord that you are planning to move using a notice of intent to vacate or a lease termination letter. There are no penalties, and you aren’t tied to a property that you aren’t happy with.
Laws Around Lease Agreement
Not having a lease agreement in place can have some consequences and is risky. When you allow someone to rent a property without a lease agreement, it is referred to as “tenancy at will”. This means that a landlord will not have a course of action if things go wrong with the tenant. This is why it’s important to have the correct documents and a lease agreement. Having a lease agreement protects both the landlord and the tenant:
- Loss of rent
- Utility bills being unpaid
- Having to pay HOA fees related to nuisance tenants
- Damage to property
- Having to pay expensive lawyer fees
- Protects you from the risk of any illegal activities done by tenants
- Gives peace of mind and offers safety
- Protects your credit from being damaged
- Protects you from not being able to find a new place to live
- Makes sure the property is in liveable condition
- No penalties for unpermitted use of the property
- Having to pay expensive lawyer fees
- Protects against property damage
Following are free month-to-month rental agreements that can be edited as per needs:
Templates for All States
Frequently Asked Questions
Can the landlord enter the property without my permission?
Just as a long-term lease tenant, you have the right to lawful and exclusive possession of the property you are renting. A landlord, under these laws, is only allowed to enter the property with your permission.
Is it mandatory to give 30 days’ notice with a month-to-month lease agreement?
In most states, a landlord is required to give 30 days’ notice before terminating a lease, including a month-to-month lease agreement.
Can the landlord evict a tenant without giving 30 days’ notice?
Eviction laws in the United States require that a landlord give at least 30 days’ notice before evicting a tenant. If it is an eviction notice without cause, some states may require 60 days’ notice.