A One Year Lease vs. A Month-to-Month Lease

In a recent post I talked about the pros and cons of a month-to-month lease, however a month-to-month lease can be a love or hate relationship for both the landlord and the tenant.

In my experience, the belief that “Landlords love the security of renewing a one year lease, but tenants find the month-to-month lease to be great” to be a myth. The truth is the best length of lease is situationally dependent on the individual.

If you are a tenant and you are not sure whether you should do a one year lease or a month-to-month lease, here are several things you should think about first!

A One Year Lease

1. Security
Tenants, if you are on a month-to-month lease then your landlord only has to give you 30 or 60 days notice to terminate your contract. It doesn’t matter when it is or if it’s inconvenient. It could be days before the birth of your child or a few days before Christmas.

This also means that during this time, the landlord will be allowed to show the house to potential families. So, not only could this have awful timing, but the landlord could be showing the home as well.

2. Price Lock
Another problem is that in most areas there is no rule against price increases on a month-to-month lease. Your landlord could suddenly raise the price to hundreds of dollars a month with only 30-60 days notice.

A Month-to-Month Lease

A month-to-month lease is great if you are trying to buy a house or need a flexible lease agreement. It is a great arrangement because with designated notice you are out of the lease hassle-free. Although a month-to-month lease can be great, here’s one reason why I wouldn’t do month-to-month lease:

1. Status Quo
A month-to-month is easier because there is no need to be on a lease. I have had a lot of tenant applicants who are looking for a house because their landlords suddenly came back to the area or wanted to do something else.

While the tenants were upset at the situation there was nothing they could do. This is an even bigger bummer if you only need a limited amount of time in the home. That is why it is better to stay on lease unless you want month-to-month lease for a specific purpose.