A month-to-month tenancy is a lease agreement between a landlord and a tenant that grants tenancy on a monthly rolling basis. Unlike other leases, which can often span a year or more, the month-to-month tenancy does not have a set expiration date.
Let’s take a look at what a month-to-month tenancy is, how it works, and about its pros and cons for renters and landlords.
Definition and Examples of Month-to-Month Tenancy
A month-to-month tenancy is one that renews each month. It doesn’t have an expiration date and will continue until either the tenant or the landlord gives notice.
The amount of notice you’ll need to give to terminate the lease depends on your state and any additional terms in the contract. Some states, such as California, will require a separate amount of notice if you’ve lived in the property for more than a year, even if you’re on a month-to-month lease.
Some states require as little as 15 days notice for month-to-month tenancies, while others can require more than 60 days.
A month-to-month tenancy can start as month-to-month or occur when a separate lease—such as a fixed-term lease—has expired and the tenant continues to live in the property. In these cases, the tenancy can become month-to-month.
For example, say you rented a two-bedroom apartment for $2,500 per month under a one-year lease. Once that year is up, you and your landlord may want to continue the arrangement, but you may not want to commit to renting for another year.
In this case, your landlord may agree to a month-to-month tenancy, in which you’d continue to make monthly rent payments but are not obligated to continue renting for another year.
How Month-to-Month Tenancies Work
Let’s consider another example to show how month-to-month tenancies work when you are the landlord.
Say that you’ve just received notice from your job that you’ll be working overseas for the next eight months. You own a home and are carrying a mortgage payment, so you will continue to have to make mortgage payments during your leave.
Rather than leaving the property vacant, you consider renting it out. Because it may be difficult for you to find a tenant willing to sign a fixed-term lease, you consider a month-to-month tenancy.
A month-to-month tenancy would give you the opportunity to collect rent, and the flexibility to return to your home after your leave, assuming you give the tenant proper notice.
Eviction rules differ according to city and especially in rent-controlled areas, where you may not be able cancel a month-to-month tenancy for any reason. Take this into account before entering into any leases.
Let’s say that you’ve rented out your property to a tenant and have nearly completed your time overseas. Since it’s been less than a year, you only need to give 30 days notice for the tenant to leave.
Some cities establish strong protections for month-to-month tenants, which include needing to give “just cause” for them to leave the property.
Pros and Cons of Month-to-Month Tenancies
Offer more flexibility
Can adjust rental rates as the market changes
Higher chance of vacancy
Fewer protections for tenants
- Offer more flexibility: Because a month-to-month tenancy has no fixed terms, it can offer more flexibility to both tenants and landlords. Those looking for temporary stays or wanting to rent their homes out for a short amount of time will benefit from a month-to-month tenancy.
- Can adjust rental rates as the market changes: Entering into a fixed-term contract can provide stability for a landlord, but it also locks you into a certain amount of rent. In areas where rent is rising, this can mean lost income. Month-to-month tenancies can allow you to change rent when appropriate—although this depends on your state’s laws.
- Higher chance of vacancy: Having a long-term tenant guarantees your property will not go vacant, allowing you to generate a reliable source of income. Relying on a month-to-month tenancy means you have a greater chance of having a vacancy if your tenant leaves and you have no other applicants.
- Fewer protections as a tenant: Depending on your state, you may have fewer rights than a fixed-term tenant when it comes to your home. This can be important if your landlord wants to remove you from the property.
- A month-to-month tenancy is a lease with recurring monthly terms and without an expiration date.
- Month-to-month tenancies can offer fewer protections than fixed-term tenancies for tenants.
- Month-to-month tenancies can occur with or without a written contract.
- Each state has different rules regarding month-to-month tenancy and the notice you’re required to give in order to vacate.