If you've ever looked for an apartment, you've probably come across the terms of the agreement in the listing. You'd likely see a long-term lease that asks you to rent for six months to one year. In some cases, though, you might see a month-to-month apartment rental lease agreement.
It's important to understand what this entails. You don't want to end up owing money unnecessarily or find yourself in a sticky situation. While not right for everyone, month-to-month rentals have some specific benefits. If you think it might be right for you, check out the following for our insider knowledge on this type of agreement.
Typically, landlords and property managers require residents to sign a lease. This agreement guarantees that the tenant will reside in the unit for a predetermined amount of time, usually 12 months.
A month-to-month lease covers 30 days and automatically renews at the end of the period unless the tenant or landlord ends it through a written notice. It's harder to come by and may cost more than a traditional lease, however — it makes a great option for some.
During a short-term lease, your landlord must provide the same basic services (e.g. keeping the property safe and livable) as they provide fixed-term renters.
Unlike a standard or fixed-term lease, a month-to-month lease does not specify the end date. You continue to rent each month under the terms of your lease until you or your landlord decide to end it — basically, your lease auto-renews each month.
Should your landlord choose to raise your rent under a month-to-month lease, you'll have to re-sign (or agree) to the change before it can take effect. When the term is over for a fixed lease, it doesn't automatically renew. The landlord and tenant agree to a set rental rate that cannot change for the duration of the lease.
A typical 12-month apartment lease comes with the caveat that if you break the lease early, you'll pay an early termination fee.
In a month-to-month apartment lease, you only need to give 30-days' notice before moving out and ending the contract.
|Lease Type||Description||Pros||Cons||Best for|
|Month-to-Month||Renews every month without a contract or verbal agreement||Flexibility, ease of moving, ability to convert to fixed term, no penalty for exit||Higher monthly cost, susceptibility to rent increases, impact on credit report||Short-term renters, corporate relocations, frequent travelers, students, prospective buyers|
|Fixed Term||Specifies a finite period of time, always in writing||Lower cost, stability, locked-in pricing, firm end dates, ability to plan around move date||Penalty for early exit, limited flexibility, larger overall cost obligation||Long-term renters, families, career professionals, pet owners|
Is a month-to-month lease a good idea for your situation? Weighing the pros and cons will help you decide if it's the best option for you.
Here are some reasons to consider monthly apartment rentals.
Here are reasons you might not want to opt for a month-to-month lease:
Don't let the “cons" necessarily put you off of the idea of a month-to-month lease completely. This option works for many different situations.
If you have a good relationship with your current landlord or explain your personal situation, you can try to negotiate a month-to-month agreement. It never hurts to ask so you can have time to find the right housing.
Even if you're looking for a new apartment, the best way to find a month-to-month lease is to ask about it. Month-to-month leases aren't always openly advertised, but many landlords and property managers may willingly negotiate one with you upon asking.
It may take a little bit of compromise on your part to show them you're serious. You could offer to pay more than the listed rental rate each month, for example. Bear in mind that some loans prohibit the landlord from allowing tenants to rent month-to-month.
If you've signed a month-to-month lease and want to break your agreement mid-month, you should expect to pay a penalty. You typically need to give 30 days' notice to end a month-to-month agreement. The same rule applies to your landlord as well, if they want to terminate the agreement.
Keep in mind this varies by state. In some states, they can give tenants as little as a few weeks. In others, they're required by law to give 30, 60 or 90 days' notice before terminating your lease.
Just like a longer-length lease agreement, you may not get your security deposit or final months' rent amount returned to you if you don't give the required amount of notice to your landlord.
Some landlords will require you to continue paying rent until they're able to get a new tenant into your apartment. This makes breaking your fixed-term lease early both inconvenient and expensive.
Having the ability to move out on short notice might be worth the potential added expense. Always make sure that you understand the terms of the lease. If you decide to take advantage of month-to-month rentals and leave after a few months, give the landlord the proper amount of notice. And no matter your type of lease, it's always smart to get everything in writing, in case anything goes wrong.