What are Short-term Leases?
A short-term lease is a contract that is signed for a duration of up to six months or less. The monthly lease is the most common type of short-term lease, but short-term leases can also be weekly contracts or any other arbitrary duration agreed upon by both the landlord and the tenant.
The main difference between a short-term lease and a long-term lease is flexibility. The landlord can change the terms of the short-term lease as long as they provide appropriate notice. In an annual lease, the terms, such as the rent amount, are fixed throughout the year.
Advantages of Short-term Leases for Landlords and Tenants
Advantages for Landlords
Short-term leases benefit landlords by allowing them to charge higher rents initially, frequently increase tenant rent, and quickly change the terms of the lease.
Rent increases: Since the rent amount is fixed only for the duration of the lease, the landlord has the ability to raise the rent each time the lease is renewed. The landlord must provide appropriate notice for a rent increase, which will vary according to state and local laws. For example, in Seattle, the landlord must give a 180-day written notice for monthly increases, but in Hawaii, the landlord must provide a 45-day written notice.
Updating terms: Short-term leases also allow for the ability to quickly change other lease terms. If the landlord wants to update the pet policy or the deposit insurance terms or checkout requirements, these terms can be easily modified by signing a new lease with the tenant.
Annual leases often convert to short-term leases: In many states, annual leases can automatically convert to month-to-month leases once the original contract term ends unless the landlord and tenant sign a new annual lease.
Advantages for Tenants
The main advantage for tenants is that short-term leases give them the ability to move quickly due to job relocation, purchasing a new home, or a desire to move to a new neighborhood.
Ease of moving: The primary reason a tenant signs a short-term lease is the ability to move quickly, as long as the tenant gives the landlord appropriate notice of their intention to leave the unit. Suitable for short-term rentals: Most people look to rent vacation properties for a short period, whether it be a week or a month. This also allows the landlord the opportunity to charge higher rents during peak season and lower rents during the off-season.
Disadvantages of Short-term Leases for Landlords and Tenants
Disadvantages for Landlords
There are several downsides to short-term leases that landlords and tenants should consider.
Termination of the lease: Both landlords and tenants can terminate the lease quickly. With little notice, this situation can be uncertain and stressful, as the tenant may need to find new accommodation quickly or conduct business, or the landlord may need to start the process of searching for a new tenant.
Disadvantages for Tenants
Rent increases: Because short-term leases are generally riskier, landlords often charge higher rents. This benefits the landlord but is considered a downside for the tenant.
Changing terms: The landlord has the ability to change the terms of the lease, including raising the tenant’s rent.
Templates for Short-term Lease Terms
Short-term leases contain most of the terms of long-term leases. The biggest differences are the duration of the lease. Below are three templates for short-term lease terms. The actual terms will vary based on local laws and regulations.
Lease duration: The lease will start on _______ and will continue as a month-to-month lease until either the landlord or tenant terminates the lease by providing appropriate written notice for eviction.
Increase
Rent: The landlord can increase the tenant’s rent by providing a rent increase notice at least 30 days before the lease renewal.
Termination of the contract: If the landlord or tenant wishes to terminate the contract, the terminating party must give appropriate written notice. In the absence of a breach of contract, this notice must be given in writing at least 30 days before the desired termination date.
Conclusion
Short-term contracts can be beneficial for both landlords and tenants, as long as they understand the advantages and disadvantages. The landlord gains the ability to quickly reset terms, including rent, but at the cost of long-term stability. Tenants benefit from increased flexibility, especially the ability to move quickly, but often pay more in rent and must accept some uncertainty regarding rent and other long-term terms.
Source: https://www.thebalancemoney.com/pros-and-cons-of-short-term-leases-4688842
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