A month-to-month rental agreement is a legal document that provides more flexibility to both landlords and tenants. It is sensible for a tenant seeking temporarily accommodation without having to commit to the usual 12 month lease. The rental agreement is also practical for landlords offering short-term leases, which must include the following clauses:
- Penalties for late payments
- Security deposit requirements
- Insurance requirements
- Pet policies
A month-to-month rental agreement will typically last for 30 days. Unlike long-term leases, it usually comes with automatic renewal unless the landlord or the tenant provides a non-renewal notice. This type of agreement would usually require a 30-day notice, but it may vary per local laws.
Here are a few more things to keep in mind about this kind of rental agreement:
- When it’s necessary – A month-to-month agreement might make sense for a landlord who sees a high rental potential in their neighborhood. It may also be suitable for vacation rentals. In another case, some longer leases may come with a month-to-month option following the end of the original agreement when a tenant decides not to sign another lease but has no plans to leave immediately.
- What landlords need to consider – Landlords must determine the best approach when making this agreement. Besides flexibility, the arrangement may open up more profit opportunities and avoid problem tenants. However, there are also disadvantages, such as possible loss of income, uncertainty, and cost of turnover, depending on the situation.
- How to terminate – Laws about the termination of a month-to-month agreement will vary by state, but they typically require both the landlord and tenant to provide written notice of the intent to terminate it. The notice is usually provided 30 days ahead of time so the landlord could find a replacement tenant and ensure their desired occupancy rate.