Month-to-Month Rental Agreement Template

Month-to-Month Rental Agreement Template

A month to month rental agreement (or lease agreement) is a legally binding contract between a landlord and a tenant. The landlord is the rightful owner of the property and leases their property to a tenant (renter). The rental agreement sets forth the terms and conditions of the lease, including the duration of the lease, rent, security deposit, and a description of each party’s responsibilities while under the lease. The month-to-month rental agreement is somewhat different than a standard rental agreement. A month-to-month arrangement does not have a scheduled end date. A landlord or tenant has the option to end the residential lease agreement “at-will” given proper notice under the contract. A month-to-month agreement can be more accommodating for both the landlord and the renter, depending on their individual needs. Typically renters favor this to have flexibility in where they live and for how long, whereas landlords typically prefer the security that a fixed-term rental agreement can provide them. Really it comes down to preference and comfort on both sides. These contracts are typically the middle ground between a Tenancy At Will (a contract-less and timeframe-free arrangement) and a Year Long Rental Agreement, or whatever specific timeframe is noted in the agreement. What is in the Month-to-Month Rental Agreement Template? 

• Description of Rental Property and Real Estate Address
• Rental Term (move-in date) and month-to-month terms
• Monthly Rent Amount and Late Fee Provisions
• Security Deposit and Pet Deposit Requirements, if applicable
• Responsibilities of Landlord and Renter for Utilities, Maintenance, and Repairs
• Legal Recourse in the Event of Default or Breach

The Basics of a Month-to-Month Rental Agreement – Flexibility  A month-to-month rental agreement differs from a standard lease of one year or more. A month-to-month lease will include some of the same provisions as a traditional lease. However, it contrasts with respect to the duration and conditions for termination. Generally, with a month-to-month rental agreement, the notice of one party’s intent to terminate requires a 30-days notice before vacating the leased premises. Termination of the Lease Goes Both Ways The landlord or renter can provide notice of their intent to terminate the lease. Therefore, both parties must understand that at any given time, the landlord can provide the tenant with notice of their intent to end the lease leaving the tenant with 30 days to vacate the premises and vice versa. Why do I need a Rental Agreement for a Month-to-Month Arrangement?  It may not seem necessary to have an agreement for a month-to-month arrangement. Sometimes family members lease their property to friends or family. However, having a rental agreement in place for both a traditional and month-to-month lease is critical. An oral agreement is not likely to be considered legally binding. It is vital to have all terms in writing to prove what the parties agreed to. Certain terms include the rent due per month, the rent due date, penalties if late on a payment, security deposit procedures and refund information, pet policies, utilities, repairs, and much more. It is a little too easy for things to become messy without a formal contract in place. For example, say two parties had an oral agreement about the monthly rent. They verbally agreed that the renter would pay $500 per month on the first of the month. However, the tenant does not pay the landlord for three months. If the landlord tries to evict the tenant, he probably would not have much legal standing to do so. Therefore, it is crucial to have a written agreement in place. There are also other caveats that require certain documents to be in writing; that is the fancy, somewhat convoluted “statute of frauds.” It is best to have an agreement in place, even if the parties are friends or family members. A yearly lease agreement usually has a provision providing that after the end date of the lease, the parties can agree to sign a new long-term lease or be offered the option stay on the property on a month-to-month basis. Month-to-Month versus Yearly Rental Agreements The magic word is flexibility. Whether or not a month-to-month (M2M) is best for a landlord or tenant depends on the circumstances. The landlord may prefer the month-to-month arrangement because he or she does not wish to be locked into a fixed-term agreement. That is the same rationale where a tenant may prefer a month-to-month lease because they do not want to be bound by an agreement for a year or more. The landlord and tenant should evaluate their individual needs before imposing/agreeing to a month-to-month rental agreement. Some landlords prefer a yearly lease because it provides stability. Similarly, a tenant may prefer an annual lease because it is more secure, and they are protected from rent increases during the duration of the lease. With a month-to-month rental agreement, then either party can provide notice and leave the property within 30 days. The tenant must consider that 30 days is not a lot of time to a) find another place and b) pack-up and move all of their belongings. Likewise, the landlord must accept that since the tenant can legally provide a 30-day notice, the landlord will also have to find new tenants on short notice. It is ideal for a tenant that may have a temporary job, or that is not planning to stay in one place for the traditional term of a lease (12 to 18 months). If a landlord does not propose a month-to-month lease agreement, a tenant may propose the idea. The tenant could explain their situation, and the landlord may agree to a month-to-month arrangement, given the circumstances. Is a Month-to-Month Rental Agreement the Right Choice for a Landlord? A landlord can benefit significantly from having a month-to-month rental agreement in place. Nevertheless, it is not a “one-size-fits-all” agreement. Some landlords will rely on a yearly lease term instead of a month-to-month agreement to secure a long-term commitment and steady income. A landlord may choose a month-to-month rental agreement for the following reasons:

• Time to see if the tenant is the “right fit” and reliable
• Financial flexibility and freedom to terminate the lease with short notice
• No penalty for terminating the lease
• Charge higher rent and right to increase the monthly rent with proper notice

Landlords can also get rid of an unruly or problem tenant at a much faster rate that a yearly commitment. Problem tenants may exhibit destructive behavior, non-payment of rent, or just ignore the terms of the lease, costing the landlord money. Under a yearly lease, if a tenant does not pay rent, the landlord cannot simply kick the tenant off the property. By law, they have to follow specific steps to properly evict a tenant if they are in breach of the lease. An eviction process is costly and time-consuming. A month-to-month rental agreement alleviates the headache of a potential eviction situation. Pros and Cons of Month-to-Month Rentals for Renters Renters may prefer a month-to-month rental agreement for some of the same reasons as the landlord. There are some benefits for tenants who are considering a month-to-month lease:

• Option to move on short notice
• No time period commitment and no end date
• Ability to look for a home to buy while not being locked-in to a yearly lease
• A place to stay while a house is being built or remodeled
• Short-term alternative housing while on a temporary job assignment

There are also some drawbacks of entering into a monthly rental agreement. The cons include:

• Short-term notice to pack it up and find a new place  (your landlord may opt to not renew your monthly lease, leaving you 30 days to find a new residence)
• Typically a lack of ability to sublease
• Instability and uncertainty
• Higher rent

Common Mistakes to Avoid when Drafting a Month-to-Month Rental Agreement A rental agreement can be as detailed as you need it to be. However, you do not want to leave it too ambiguous. The terms should be clear so that both the landlord and tenant are clear on what they will be responsible for.

• Parties to the Lease: The landlord should confirm how many tenants will be subject to the lease. The landlord should not only provide their contact information but also obtain it from the tenant(s). The information should be verified so that each party can readily contact the other. The lease should also specify who is permitted to live on the premises and if pets are allowed.
• Start Date: Even though the agreement is month-to-month and does not have a specific end date, the agreement should list the start date when the tenants take possession of the property.
• Notice to Terminate: This is the most important element of a month-to-month rental agreement. The written notice specifies how long before the landlord or renter plans to and can under the agreement, end the month-to-month tenancy. Not including a notice period is detrimental. Another typical mistake is not allowing enough time for termination of the agreement. Sufficient notice is typically 30 days. It is wise to consult with your attorney because some state laws may require a more extended notice period of 60 to 90 days.
• Deposits: The rental agreement should list the required security deposit. Each state has different laws on how much a landlord is allowed to charge for a security deposit. You should consult an attorney to confirm your state’s cap on security deposits along with other special rules or provisions.
• Pet-Friendly: A month-to-month lease should indicate whether or not pets are allowed on the premises. If so, the pet should be documented on the lease along with a security deposit, if applicable.
• Monthly Amount of Rent and Late Fee Penalties: The rent should always be listed in a lease agreement. Along with the rent amount, how the tenant should make the month’s rent payment should also be identified. The due date for the rental payments should be clearly listed along with any penalties for unpaid rent. If it is not explicitly in the agreement, the tenant may not be bound by it or any outside oral agreement made.
• Relying on a Verbal Agreement: When leasing property, this is never wise. An oral agreement is rarely enforceable, and without proof in writing, it is hard for either party to be bound by it.
• Designation of Responsibilities: To eliminate any confusion, the rental agreement should identify who is responsible for what. This can include which party is responsible for utilities and which party is responsible for repairs to the premises and to what cost. These are essential elements ensuring each party’s responsibilities are clear and adequately agreed upon.
• Signatures: This may seem basic, but it is essential. The responsible tenants listed on the agreement (i.e., the ones responsible for paying the rent) should be listed and should each sign the lease. The landlord should also sign and date the contract. Without signatures, the agreement may not be enforceable.

Let’s Get Moving – Electronic Signatures  Electronic signatures are incredibly convenient for landlords and tenants. It speeds up the process so the tenants can review and sign the agreement faster than the alternative. E-signatures are legally binding, so once the document is signed, the agreement is in place and ready to go. ApproveMe.com simplifies the signing process for you. All parties to the month-to-month lease agreement will receive a copy in their inbox for their records. A lease is one of the most important documents for both the landlord and renter; it should be easily accessible at any time. ApproveMe.com ensures all parties to the agreement get a copy to the email address provided, so the agreement is less likely to get misplaced or lost. Landlords owning a great deal of rental property will need to keep their income steady and maintain occupancy in as many of their properties as possible. Streamline your property management with E-signatures. They are just one small but productive way to eliminate the hassle of waiting for an extended amount of time for the parties to sign the lease. Tenants will also find this electronic mode of signature and delivery easily accessible and efficient. Other Resources  Landlords are always on the move. They have property to lease, which leaves little time for much else. Here are some links that may be worth looking into that focus on property management to help review potential tenants, collect rent, and organize your properties.

• Buildium
• Tenant Cloud
• Cozy Rent