A month-to-month rental agreement is a legal document that outlines a formal relationship between an actual property owner and another party to rent residential property monthly.
What Is a Month-to-Month Rental Agreement?
A month-to-month rental (lease) agreement is a tenancy at will with an undetermined end date. For most month-to-month leases, the tenants and landlords must give at least a 30-day notice to terminate if they do not intend to continue the tenancy.
The Month-to-month lease continues each month until the landlord or tenant provides a lease termination notice, unlike standard lease agreements that are usually for a set period, like one year.
Unlike long-term fixed agreements, the month-to-month ones will automatically renew at the end of the rent payment period unless you or the tenant end the tenancy.
A month-to-month rental agreement affords landlords and tenants many benefits, but there are processes and laws (and pros and cons) you should know before entering this type of short-term rental contract.
A month-to-month rental agreement will include all of the following:
- Premises: the location of the apartment, house, or room for rent
- Landlord: (also called the lessor) the owner or manager of the Premises
- Tenant: (also called the lessee) the person(s) agreeing to rent the Premises
- Monthly Rent: the amount the tenant owes the landlord each month
- Eviction Notice: the length of time in which the Landlord must provide advance notice to the Tenant before terminating the contract for non-payment of rent by the due date or violation of another lease term
If you aren’t sure about leasing your rental property long-term, a month-to-month rental contract is a great choice. It allows you to earn rental income while giving you legal protection.
How a Month-to-Month Lease Agreement Works
A month-to-month lease allows the tenant and landlord to continue the tenancy as long as both parties agree to the rental arrangement.
Month-to-month tenancy works as follows:
- The landlord and tenant agree to a month-to-month lease for an undefined period until either party wishes to terminate.
- The tenancy begins on the date indicated in the agreement.
- When providing proper termination notice, the tenant and landlord must adhere to contract terms and state and local statutes. The legal time frame for terminating a month-to-month lease varies widely depending on the location.
- The termination notice period is typically at least thirty (30) days. This means a notice to terminate a month-to-month tenancy will end upon completing the next full monthly term.
- A month-to-month lease can be established based on a written agreement with no specific duration.
- A month-to-month lease is implied if the landlord accepts monthly rent payments without a written contract.
- A month-to-month lease may apply if a long-term lease ends and the tenant continues to pay rent to the landlord monthly.
Some cities and states have stringent laws regarding providing the required notice under a month-to-month lease.
If you are unsure which time limits apply to your situation, contacting a real estate attorney is best.
Month-to-Month Lease: Pros and Cons
Month-to-month leases offer advantages and disadvantages for landlords and tenants.
In addition to learning the pros and cons, landlords and tenants should understand their rights regarding month-to-month leases.
Advantages for Landlords
- More flexibility. They can adjust the lease terms or increase the rent if these modifications are consistent with state and local laws.
- Termination without cause. Since month-to-month tenancy is often considered at will, the landlord can terminate the lease without cause as long as they provide the proper legal notice.
- Better tenant pool. Landlords benefit from month-to-month leases because they can retain high-quality tenants who do not want a long-term lease agreement.
Disadvantages for Landlords
- Risk of losing tenants. When they sign a month-to-month lease agreement, landlords risk losing tenants more quickly.
- No penalty for lease termination. While a long-term lease agreement may include penalties for early termination, month-to-month leases do not.
- High tenant turnover. This can cost the landlord significantly if they cannot find someone to rent the space quickly.
- More fees. A landlord may have to pay advertising and cleaning fees every time a tenant moves out, which can add up over time.
Advantages for Tenants
- Flexibility. Tenants on a month-to-month lease also benefit from the flexibility of at-will tenancy. If they pay rent on time, the lease continuously renews without a specific end date.
- Easier termination. They can terminate the agreement with proper notice at any time.
- No early termination penalties with notice. A tenant does not have to pay an early termination penalty if they decide to move out and provide proper notice.
Disadvantages for Tenants
- Little time to prepare to move. Since the landlord can decide to terminate the lease at any time without cause, the tenant may have to move with little warning.
- Rent increases. A tenant on a month-to-month may also face frequent rent increases.
- Tenency term chances. Month-to-month leases often come with changing tenancy terms each month, which can be unpredictable and challenging.
How to Write a Month-to-Month Rental Agreement
Follow the steps below to write a month-to-month rental agreement.
Step 1 – Fill in Landlord and Tenant Information
1. Landlord. Provide the landlord’s full name or company name, depending on whether the landlord is an individual or an entity.
2. Tenant. Write the tenant’s full name or company name, depending on whether the tenant is an individual or an entity. If there is more than one tenant, enter the name of each additional tenant.
Step 2 – Enter Premises Details
3. Premises. Describe the rental. Specify the type of residential property being rented, such as an apartment or a house. You can write one in if none of the options provided describe the property type.
Fill in the number of bedrooms, bathrooms, and parking spaces (if parking is included with the property). Provide the property’s street (physical) address, including the apartment/unit number (if applicable), city, state, and zip code.
4. Storage. Specify whether the rental property includes any storage space. If yes, describe the storage space.
5. Furnishings. State whether the rental property will include any furnishings or not. If yes, provide a list of the furnishings included with the rental.
6. Additional Description. If any additional information would help describe the property, include it here.
Step 3 – Write Term Date
7. Term. Provide the start date of the lease.
Step 4 – Fill in Rent Information
8. Rent. Specify the dollar amount of the monthly rent payment, the day it is due (e.g., the 5th day of the month), and the payment method.
9. Proration. State whether or not the rent for any length of less than one month will be prorated.
10. Bounced Check. Write the amount the landlord will charge for any bounced checks.
Step 5 – Check Guaranty Option
11. Guaranty. Specify whether or not a guarantor is required for the tenant under this lease. If yes, provide the guarantor’s full name and address.
Step 6 – Note Late Fee Option
12. Late Fee. State whether or not a late fee will be charged if the rent is not paid on time. If yes, specify the day of the month the rent will be considered delinquent and the number of days for any grace period.
If a late fee is assessed, select whether the late fee will be a set dollar amount (including the amount) or a percentage amount.
Step 7 – Check Utilities
13. Utilities. Note if the landlord will be responsible for any utilities and indicate which. (Typically, the tenant is responsible for all utilities.)
Step 8 – Write Security Deposit Details
14. Security Deposit. Provide the dollar amount of the security deposit to be paid by the tenant to the landlord.
Enter the number of days after the end of this agreement that the landlord will return the security deposit (less any amounts under this section) to the tenant.
Specify whether the security deposit will be held in an interest-bearing account.
*Note that most states have laws regarding security deposits, the amount, where they’re saved, how they can be used, and when they must be returned to the tenant.
Step 9 – Fill in Use of Premises Information
15. Use. The tenant and the tenant’s immediate family will use the property for residential purposes. In addition, the tenant is responsible for any damage caused to the property by their guests. Write any additional guest or visitor policy.
Step 10 – Write Conditions of the Premises
16. Condition. The tenant agrees to the current condition of the appliances, fixtures, and furnishings (if applicable) other than any exceptions to be added here.
Step 11 – Note Maintenance and Repair Policies
17. Maintenance and Repairs. The tenant agrees to maintain the property and not remove any appliances, fixtures, and furnishings (if applicable). If the property has an outside area or grounds, the tenant also agrees to maintain those.
Step 12 – Check Rules and Regulations Option
18. Rules and Regulations. Specify whether or not there are separate rules and regulations for the rental property. If there are, a sample “Exhibit A – Rules and Regulations” is included at the end of this agreement for your reference.
Step 13 – Choose the Military Clause Option
19. Military Clause. State whether or not the tenant may terminate the lease agreement early for activity duty in the U.S. armed forces.
Step 14 – Check the Smoking Option
20. Smoking. Note whether smoking is permitted or prohibited on the property.
Step 15 – Choose the Pet Option
21. Pets. Provide whether or not tenants are allowed to keep pets on the property. If yes, specify the type of pet(s) and the amount of any pet deposit.
Step 16 – Check Inspection Checklist Option
22. Inspection Checklist. Specify whether or not the tenant must complete an Inspection Checklist at the time of move-in.
If yes, a sample “Exhibit B – Rental Inspection Checklist” is included at the end of this agreement.
Step 17 – Note Renter’s Insurance Option
23. Renter’s Insurance. State whether the tenant is required to obtain a renter’s insurance policy.
If yes, the policy must have at least $100,000 of personal liability coverage, and the landlord must be named as an interested party or additional insured.
Step 18 – Choose the Assignment and Subletting Option
24. Assignment and Subletting. Write whether or not the tenant can assign or sublease any part of the property.
If allowed, specify whether the tenant must obtain the landlord’s written consent to assign or sublease.
Step 19 – Fill in Default Details
25. Default. In the event of default (other than failure to pay rent), the landlord may give the tenant notice and the opportunity to correct the default.
Provide the number of days the tenant has to correct the default. If the default is the tenant’s failure to pay rent, specify the number of days after receipt of the landlord’s notice that the landlord can terminate this agreement.
*Note that most states have laws regarding the amount of notice a landlord must give a tenant for failure to pay rent or other violations of lease terms.
Step 20 – Check Lead Disclosure Option
26. Lead Disclosure. If the property was built before 1978, the landlord must disclose whether or not there are known lead-based paint and/or lead-based paint hazards on the property.
A “Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards” is included at the end of this agreement for your reference.
Step 21 – Write Notice Information
27. Notices. All notices must be in writing. Enter the address where the notices should be sent to the landlord and tenant.
Step 22 – Enter Governing Law State
28. State Law. Fill in the state’s laws that will govern the construction of this agreement.
Step 23 – Choose Disputes Option
29. Disputes. If there is a dispute, specify whether the dispute will be resolved through court litigation, binding arbitration, mediation, or mediation then arbitration.
Step 24 – Note Miscellaneous Details
30. Miscellaneous. Provide for any other provisions not already included in this agreement.
