What Is a Month-to-Month Lease Agreement?

By PropertyClub Team
May 20th 2024
A month-to-month rental agreement, also known as a monthly lease agreement, is a type of residential lease agreement that continues for 30 days at a time. The tenancy is legally-binding and enforceable. Generally, the terms continue until either party terminates the agreement, either according to the terms of a written (or oral) lease agreement or under the applicable state law. 

hash-markTable of Contents

What's In a Month-to-Month Rental Agreement?
Month-to-Month Lease Downsides
Should I Enter Into A Month-to-Month Lease Agreement?
How To Terminate A Month-to-Month Lease Agreement?
Month-to-Month Lease Agreement Bottom Line

hash-markWhat's In a Month-to-Month Rental Agreement?

The standard terms you'll find in a month-to-month lease agreement are relatively similar to the terms you would find in a typical fixed-term lease agreement or periodic lease, including the names of the parties, their contact info, the lease terms, the monthly rent payment, and rules and regulations. 

1. Names and Addresses

First, the month-to-month rental agreement will include the parties' names and addresses, the lessor/landlord, and the lessee/tenant. Suppose a corporate entity owns the apartment. In that case, the lease agreement will more than likely list the entity named as the landlord and possibly the individual responsible for overseeing the property (i.e., the property manager).

2. Lease Details

Next, the rental agreement will include the lease term, the commencement date, and the expiration date. Keep in mind. not all month-to-month rental agreements start off like that. Instead, you may have a lease agreement that has a term of one or two years, and after the ending date, the parties agree that the lease will continue on a month-to-month basis until either party terminates it. This would be in lieu of a lease renewal. 

3. Monthly Rent Payment Details

Next, the lease agreement will detail the lease payments. It will specifically indicate what the rent amount will be monthly. It will also explain where the rent should be sent, how the rent should be paid. (e.g., by check, credit, Cashapp, etc.) and who the rent should be made payable to. There may also be a late fee clause. This amount may be subject to a limit according to your state laws and any applicable grace period. 

4. Lease Rules

The last primary section of a month-to-month lease agreement will specify what the premises may be used for. If it's a residential dwelling, the lease will state that the property may only be used as a residence and not for commercial purposes. This section may also indicate who is an authorized occupant under the lease agreement or how many adults are allowed to occupy the premises.

The rental lease agreement may also address who is responsible for utilities, subletting rules, whether the property is furnished, attorney's fees, and the notice requirements to terminate the tenancy. While a standard month-to-month apartment lease may include additional provisions and terms of the agreement, in general, these are the primary ones to look out for. 

hash-markMonth-to-Month Lease Downsides

Month-to-month leases are not bad in all situations, but sometimes the do get a bad reputation. Specifically, month-to-month lease agreements can buy both the landlord and the tenant some time while they figure out what they want to do long-term. For example, if a landlord is considering selling the property soon, it may be beneficial to have a short-term tenant until the landlord figures out what he/she wants to do. Additionally, a month-to-month lease agreement may be a way for the landlord and the tenant to do a trial run of the tenancy. For example, if the tenant is unsure about the property, neighborhood, or school district, they may want to do a trial run to see if they like it or if it's a good fit.

Additionally, the tenant may have credit issues that make the landlord skeptical about renting the property to them. As such, the landlord may prefer to do a month-to-month trial run to see if the arrangement could work out. Lastly, month-to-month lease agreements are good for tenants who move around often or may not reside in the same city year-round, such as students, retirees, or military personnel. 

hash-markShould I Enter Into A Month-to-Month Lease Agreement?

There is no simple answer on whether or not you should enter into a month-to-month lease agreement. Specifically, the answer revolves around what your needs are at the moment. One of the biggest advantages of month-to-month lease agreements is that they are flexible.

On the other hand, one of the biggest risks of entering into a month-to-month lease agreement is that there is often short notice required to end the tenancy by the landlord. As such, you must be prepared to vacate the premises on short notice, which averages around 30 days.

However, in some states, only a seven-day notice is a requirement. As such, it's important to research your state's laws before entering into a month-to-month lease agreement. Lastly, keep in mind that having a good working relationship with your landlord will not allow you to stay in your apartment once the lease agreement has been terminated.

hash-markHow To Terminate A Month-to-Month Lease Agreement?

  1. Draft a 30 Days Notice
  2. Send Your Landlord Notice
  3. Understand Your Local and State Laws
  4. Move Out

1. Draft a 30 Days Notice

To cancel a month-to-month lease agreement in most states across the country, you must provide at least a 30-day notice to the landlord before the expiration of the tenancy or before the next term begins. 

2. Send Your Landlord Notice

If you decide to mail the notice to your landlord, make sure you give it enough time for your landlord to actually receive it. You should also send the notice in a method that can be tracked as proof that you sent it and that your landlord received it. Once you are sure that your landlord has received the notice, it is a good idea to contact them to agree on when your last day of the lease will be. Or alternatively, review your state statutes to determine what date is considered your last day under the law. 

3. Understand Your Local and State Laws

In general, the rules vary from state to state. Some states only require a 30-day notice, which can be given at any point in the 30 days. Other states require that the 30-day notice be given before the new month/term begins. In that event, if you are trying to terminate your tenancy on March 31st, your landlord must receive the vacate notice before March 1st. If the landlord doesn't receive the notice before March 1st, then technically, your last day under the lease would be April 30th. 

4. Move Out

If you move out of the apartment before providing your landlord with the adequate notice required by your agreement, or your state's law, the landlord will most likely deduct the amount from your security deposit. This is because you are technically breaking your lease. In other words, you will end up paying for another month's rent anyway.  

hash-markMonth-to-Month Lease Agreement Bottom Line

Month-to-month lease agreements can be a great choice for tenants looking for flexibility. However, since a landlord can end a month-to-month lease agreement just as easily as a tenant, it's important to be prepared to move on short notice if needed. As long as both the landlord and tenant know what to expect, a month-to-month lease can be a win-win for everyone involved. 

It is especially a great option for those struggling to get an apartment with a low credit score.