A month-to-month lease agreement is needed by a tenant or a landlord to protect their rights and interests during a lease period of a property. The benefit of these contracts is that they can be canceled by either party at will, following the notice period procedure.
Creating a month-to-month lease agreement requires the proper lease agreement template. CocoSign offers you month-to-month lease agreement templates in a proper format, created by legal experts.
Read below to find out more about month-to-month lease agreements:
What Is a Month-to-Month Lease Agreement?
A month-to-month lease agreement is a legally binding document that outlines the terms of leasing a residential property between the property owner and another party.
A month-to-month lease agreement is quite different from a long term lease agreement, in the view that the latter allows tenancy for longer periods of time (usually a year). However, in a month-to-month lease agreement, the renter leases the property on a per month basis.
A major component of a month-to-month lease agreement is the cancellation policy. Either party involved in a month-to-month lease agreement can cancel the agreement at will, after giving a notice period of 30 days or 60 days (depending on State Laws).
The month-to-month lease agreement is perpetual until either party wishes to end it. The property owner in a month-to-month lease agreement has the option to increase the rent (with the rent increase conforming to State Laws).
However, they need to provide the renter with an adequate notice period, after which the renter has the option to pay the increased rent or vacate the property.
How Does a Month-to-Month Lease Work?
A month-to-month lease agreement is similar to a standard lease agreement in terms of fulfilling one’s responsibilities, moving-in, eviction, and following the housing laws.
The major difference is the ability to cancel the agreement at will with an adequate notice period that adheres to the State Laws. further, the ability to cancel the lease agreement is provided to both- the landlord and the tenant.
The notice period can be agreed upon by the property owner and the renter. However, it needs to obey the minimum notice period requirement of the State in which the property is present.
When Should You Use a Month-to-Month Lease Agreement?
There can be confusion regarding whether to use a month-to-month lease agreement or a long term lease agreement. Here are the cases in which a month-to-month lease agreement should be used preferably:
Month-to-Month Lease Agreement For Landlords:
A month-to-month lease agreement is a good option for landlords who wish to enter into a trial period with a tenant, before going ahead with a long term lease.
If the landlord is unfamiliar with the tenant, a month-to-month lease agreement allows them to terminate their relationship with the tenant after providing the appropriate notice period.
Further, a month-to-month lease agreement also gives a landlord greater freedom to increase the rent on the property. This allows the landlord to adapt to the rapidly changing housing trends.
Month-to-Month Lease Agreement for Tenants:
Living in the same housing place can be frustrating for some tenants. For such tenants, a month-to-month lease agreement provides the flexibility to change their location at will (after following the notice period process).
Further, if a renter wishes to try out a property before renting it for the long term, a month-to-month lease agreement can turn out to be the perfect fit in such a case.
For transient workers who might have to leave town after a short period of time (generally a few months), a month-to-month lease agreement can be the perfect fit.
Advantages and Disadvantages of a Month-to-Month Lease Agreement
Advantages of a month-to-month lease agreement:
- A month-to-month lease agreement has several advantages for the renter and the landlord, some of which are mentioned above.
- This type of lease agreement provides the renter and the property owner with greater housing freedom. Either party can end the lease agreement at will, so neither is constrained by having to go through the entire lease duration even when they do not wish to.
- Furthermore, it gives financial freedom to the landlord as they can increase the property rent according to the changing housing trends in that locality.
- For the renter, it gives them the option to try out a property before leasing it for the long term. If they do not like the property, they have the option to move to new housing.
Disadvantages of a month-to-month lease agreement:
- Leasing a new property is a time and effort consuming process, both for the renter and the property owner. Since the month-to-month lease agreement allows either party to cancel the lease, it can leave the other party spending all the time and effort again for a new lease, even if they do not wish to.
- At times, renters can see the month-to-month lease agreements as being unfair since they provide the landlord with the ability to increase the rent on a regular basis, after providing the renter with a notice period. The renter only has the option to pay the rent or vacate.
- For the landlord, the notice period of 30 days or more can lead to the requirement of following the same eviction process as a long term lease, along with the risk of unpaid rent.
Components of a Month-to-Month Lease Agreement
The month-to-month lease agreements generally include:
Identification of Landlord and Tenant
The lease agreement should identify the parties in the agreement, i.e. the landlord and the tenant. If there are more than one tenants, the lease agreement should list each of them.
Identification of the Premises
The location of the property that is being leased should be mentioned in the lease agreement.
The lease agreement should also mention the monthly rent that will be paid by the renter to the property owner.
In case the renter does not meet the minimum income requirement or the credit score, the lease agreement may have a Guarantor who agrees to bear any unpaid rent in case the renter fails to pay it.
In case there are any refundable or non-refundable deposits on the premises, the lease agreement should mention so.
The lease agreement should detail the eviction process, including the notice period that has been agreed by both the parties. The notice period should meet the minimum guidelines that are set by the laws of the State in which the property is present.
A month-to-month lease agreement is a legally binding document, which means that it needs to be written well. Therefore, the best way to go ahead with these contracts is to download the month-to-month lease agreement template from CocoSign.
CocoSign offers a variety of contract templates suited for the particular needs of either party involved. The templates are created by legal experts so as to make them legally binding. Further, they can be edited and tailored to meet your needs.
Download the month-to-month lease agreement template from CocoSign right away!
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