What is a Month-to-Month Lease?

You might be a homeowner renting out property for the first time or a seasoned landlord. Knowing the lease types will benefit you as a homeowner. Otherwise, navigating lease agreements can be daunting for you.

For your long-term lease goals as a property owner, the type of lease agreement you offer really matters - even for your tenants. Having said that, a flexible and increasingly popular option is the month-to-month lease.

But what is a month-to-month lease, and how does it work? Here’s everything you need to know as a U.S. homeowner:

What is a Month-to-Month Lease?

As the name implies, a month-to-month lease is an agreement between a landlord and a tenant that renews each month. It doesn't require a long-term commitment. Traditional leases often locked tenants into six months, a year, or even longer.

A month-to-month tenancy operates on a rolling basis. It’s very flexible because either party can terminate the lease with proper notice, benefiting both homeowners and tenants. This type of tenancy is mostly found in residential leases.

Many people don’t want to commit to a longer residency period. Therefore, a month-to-month lease is an ideal option for U.S. homeowners. You might be testing the waters as a landlord, or you may want to sell the property in the near future.

Whatever your situation is, this lease agreement gives you the flexibility to adapt your plans quickly.

How Does a Month-to-Month Lease Agreement Work?

The monthly lease system is rather simple. On the agreement of the two parties, the contract stipulates the rent amount, date of payment and termination conditions. You are no longer confined to a particular expiry date, as is the case in fixed term leasing.

The month-to-month lease under the contract automatically renews at the beginning of each month unless one party makes a notice for ending a lease.

These agreements mainly rely on the notice period. So, many people ask: how much notice period is required for a month-to-month lease? In most states, landlords must provide tenants with a written 30-day notice before terminating a month-to-month lease.

In certain states, the tenant must be given 60 days notice in the event he has inhabited the property more than one year, as in California. Conversely, tenants are usually supposed to give at least 30 days notice before they move out.

Be aware that notice period laws can vary by state, so it's essential to check local regulations to ensure compliance. For instance, in Texas, landlords only need to provide three days’ notice for evictions in certain circumstances.

Note that some states have different laws on notice period and it is imperative to consult local laws to be in the right direction. As an example, evictions can be performed by landlords in Texas by giving only 3 days notice under some conditions.

During the stay in Washington, tenants should be given 60 days notice in case the landlord intends to sell the property.

Difference between Month-to-Month and Short-Term Lease Agreements

Month-to-month leases and short-term leases appear to be similar, yet they have different purposes. A short-term lease is a sort of contract that is usually fixed term and not more than six months. It still involves having to be committed to the term of the lease, which is limiting in case you need flexibility.

On the contrary, a month-to-month lease allows roll-on leases. No fixed expiry date selected and any party can terminate the agreement by giving due notice. In the case of homeowners that prefer to maintain their options of selling the home, increasing the rent, or just alter their rental plan, a month-to-month plan makes it more flexible.

Is a Month-to-Month Lease Suitable for You? Pros and Cons

Whether or not to present a month-to-month lease is a choice that highly depends on your objectives as a house owner. There are advantages and disadvantages that come with this kind of arrangement.

The Pros

You can adjust rental terms, such as increasing rent, as permitted by the local laws with a short notice. Secondly, flexibility this type of agreement provides is highly rewarding. This stand-out benefit of a min-to-month lease sets you stress-free when you’re unsure about your long-term plans or you have to sell your rental property or want to move back in.

The tenant pool is another bid advantage. Month-to-month leases often appeal to people in transitional life stages. Some people have to keep relocating for work or wait to purchase a home. This can mean less vacancy downtime for your rental property.

The Cons

A few things are also unpredictable. Tenants can end the lease with little notice, potentially leaving you scrambling to find a replacement. This lack of stability can lead to more frequent turnover, which means more time and money spent on marketing, cleaning, and maintenance.

Compliance also remains an issue Although the state governs the month-to-month lease, you must stay informed about regulations surrounding notice periods, rent increases, and tenant rights.

Can You Break a Month-to-Month Lease?

One of the most common questions homeowners ask is whether they or their tenants can break a month-to-month lease. The short answer is yes, but it must be done in accordance with the terms of the agreement and applicable state laws.

For tenants, breaking a lease typically involves providing proper notice. However, if they leave without notice, you may have grounds to withhold their security deposit to cover unpaid rent or damages.

On the other hand, landlords can break a month-to-month lease if they provide the required notice. This flexibility can be beneficial if you decide to sell the property or if the tenant violates the lease terms.

The Bottom Line

Month-to-month leases are a flexible, practical option for U.S. homeowners looking to rent their properties without locking themselves into a long-term commitment.

They offer adaptability and the ability to respond quickly to changing circumstances, whether you're planning to sell, move back in, or adjust your rental strategy. That said, they also come with challenges, including higher tenant turnover and the need to stay on top of state-specific regulations.

The month-to-month tenancy is gaining immense popularity in masses due to its terms offering flexibility in today’s uncertain times.

Manage Your Rental Smarter with Mosaic Services

Mosaic can guide you with everything from tenant screening to lease management. We make the process simple using tools designed to help U.S. homeowners and streamline the rental process.

Managing your property doesn’t have to be overwhelming - be it month-to-month leases or traditional agreements.

Get started today with Mosaic and make property management a breeze.