Evaluating month-to-month leases
A Month-to-Month Rental Agreement is a type of residential Lease Agreement that lasts for one month at a time and typically involves an automatic renewal unless the tenant or landlord provides a notice of nonrenewal or a Lease Termination Letter. The lease should specify the amount of notice required, usually 30 or 60 days.
Pros of a Month-to-Month Lease for:
- Landlords - In a market where rents continue to rise and available tenants are plentiful, you may prefer shorter leases on residential properties, as they allow you to keep your rental rates comparable to those of others in the area.
- Tenants - If you are looking to relocate or to purchase a home, you may want the flexibility that comes with being able to give only 30 or 60 days notice of nonrenewal.
- Landlords - In a rental market with lower occupancy rates, the potentially high turnover associated with shorter leases may prove problematic, as new tenants may not be at the ready. An apartment without a lease equals loss of rental income.
- Tenants - Rent under month-to-month residential leases tends to be higher than with annual leases. Your landlord also may decide to not renew the lease before you are ready to move.
Evaluating annual leases
An annual residential Lease Agreement typically runs for a one-year period, though two-year lease agreements may be required for higher-end properties. The lease typically includes an automatic transition to month-to-month status unless the tenant or landlord provides notice of nonrenewal. The rental Lease Agreement typically states the amount of notice required to vacate the property, usually 30 or 60 days.
Pros of an annual lease for:
- Landlords - In addition to having stable rental income for a year or longer, you eliminate the need to spend time and money finding a new tenant and preparing the property for move-in.
- Tenants - You have a stable and an often lower rental rate, and you do not have the costs associated with moving, like movers, new security deposits and utility transfer fees, during that time period.
- Landlords - In addition to only being able to raise rent once a year (at lease renewal time), you also may be stuck with a troublesome tenant, like one with a constantly barking dog.
- Tenants - You may find yourself stuck in an unfortunate situation for a year or longer. For example, the property could be next to a home with a serious noise situation that your landlord has no control over.
No matter which type of lease you prefer, whether as landlord or tenant, include all necessary terms and conditions in the document to keep everyone on the same page.
Ways Rocket Lawyer can help:
- Talk to a Legal Pro.
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If you decide to register an LLC as a landlord, or for another business venture, with a Rocket Legal+ membership, your first LLC registration is FREE (excluding state fees). Rocket Legal+ members also get HALF OFF Rocket Lawyer Pro Services, including registered agent services and Rocket Tax. - Everything legal all in one place.
From leases to legal advice and more, Rocket Lawyer provides landlords and tenants with the support they need to manage their property, at a fraction of the cost. Getting legal documents and important letters reviewed by a Legal Pro, electronically signed, and stored all in one place can be convenient, easy, and affordable. Let Rocket Lawyer connect you with everything legal.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
