What You Should Know About Month-to-Month and Fixed Term Leases
If you're looking into leasing, you may be wondering what the difference is between a month-to-month lease and a fixed term lease. In many aspects they are the same; they outline the responsibilities of both landlord and tenant. The major difference between the leases is when they can be expected to end and how they can be terminated.
What is a Month-to-Month Lease?
A month-to-month lease is a lease that is presumed to begin on the first day of the month and ends on the last. It automatically renews if it is not otherwise canceled, and therefore it runs indefinitely until one party cancels it. A month-to-month lease will operate either on terms set out by the lease itself or the lease it originated from. A month-to-month lease usually requires a certain amount of notice to cancel, which is either outlined by an agreed upon the lease or adheres to state minimums.
What is a Fixed Term Lease?
A fixed term lease is a lease that expires on a specific date unless it is otherwise renewed. A fixed term lease will be assumed to either expire or to transition directly into a month-to-month lease, and this will be written within the lease. For the duration of this lease, it cannot be broken by the tenant without paying penalties. A landlord will not be able to break this lease without cause, such as cause for eviction.
What's the Difference Between the Two?
- A month-to-month lease can be ended at any time, with appropriate notice. As long as a landlord gives the tenant the appropriate warning (usually 30 to 45 days), the landlord can choose to end this lease. Similarly, the tenant can also choose to leave, given appropriate notice.
- A fixed term lease cannot be ended before the end date by the landlord or tenant without legal or financial penalties. This gives both the assurance that the lease will continue, but also reduces the flexibility of the lease for both parties.
- A fixed term lease will usually transition to a month-to-month lease after the lease date. This means that after a certain date, the lease continues, but can be canceled by either party. Month-to-month leases are not commonly given out from the beginning, due to their unpredictability.
- A month-to-month lease does not have the same protections as a fixed-term lease regarding raising the rent. A month-to-month lease "renews" every month, so a landlord can raise rent at any time. A fixed-term lease will contain provisions that do not allow this.
Overall, a fixed term lease is designed to establish a relationship between a landlord and tenant that is, in some form, guaranteed for a specific amount of time. Meanwhile, month-to-month leasing offers both parties greater flexibility, but also fewer assurances. For more information about leasing and different types of lease, give us a call at Aria Properties. And don't forget to subscribe to our blog for more updates!