The monthly rent is a lease agreement between the landlord and the tenant that grants rent on a monthly basis. The tenant moves into an apartment, house, room, or another residential space without needing to renew the lease at specified intervals.
Definition and Examples
The monthly rent is renewed every month. It has no expiration date and will continue until the tenant or landlord gives notice. The monthly rent can start as a monthly lease or occur when a separate lease—such as a fixed-term lease—ends, and the tenant continues to live in the property. In these instances, the rent can become monthly.
Note: Some states require less than a 15-day notice for monthly rent, while others may require more than 60 days.
For example, let’s say you rented a two-bedroom apartment for $2500 a month under a one-year lease. Once that year is over, both you and the property owner may want to continue the agreement, but you might not want to commit to another year lease.
In this case, the property owner might agree to a monthly rent, where you will continue to pay the monthly rent but are not obligated to continue the lease for another year.
How Monthly Rent Works
Let’s take another example to illustrate how monthly rent works when you are the owner.
Suppose you just received notice from your job that you will be working overseas for the next eight months. You own a home and are paying a mortgage, so you will continue to make the monthly mortgage payments while you’re away.
Instead of leaving the property vacant, you consider renting it out. You think about monthly rent because it might be difficult for you to find a tenant willing to sign a lease for eight months.
Monthly rent will allow you to collect rent and have the flexibility to return to your home after you leave, provided you give proper notice to the tenant. Let’s say you have rented out your property to a tenant and are nearing the end of your time abroad. The state you live in requires a 30-day notice if you have been away for less than a year. You will return six months after you leave, so you only need to give notice 30 days before you need access to the property.
Note: Eviction rules vary according to city laws. For example, in rent-controlled areas, you may not be able to terminate the monthly lease for any reason. You should consider this before entering any contracts.
The amount of time needed to terminate the contract depends on state laws and any additional terms in the contract. For example, some states like California may require a separate amount of notice if you have lived in the property for more than a year, even if you are on a monthly lease. Additionally, some cities have strong protections for tenants living month-to-month, which include requiring an “just cause” to evict them or force them to leave the property.
Advantages and Disadvantages of Monthly Rent
Advantages
- Provides more flexibility: Since there are no fixed terms in the monthly rent, it can offer more flexibility for tenants and landlords. Those looking for temporary stays or wanting to rent out their homes for short periods will benefit from monthly rent.
- Can adjust rental prices according to market changes: A fixed-term lease can provide stability for the landlord, but it locks you into a specific rent amount. In areas where rental prices are rising, this could mean a loss of income. Monthly rent might allow you to adjust the rent as needed—although this depends on your state laws.
- Does not
There is usually no penalty for terminating a month-to-month rental agreement.
Disadvantages
- Higher chance of vacancy: Having a long-term tenant ensures that your property will not be vacant, allowing you to generate a reliable source of income. Relying on month-to-month rental means you have a higher chance of having a vacant apartment if the tenant leaves and you do not have other applicants.
- Less protection for tenants: Depending on your state, you may have fewer rights than a long-term tenant when it comes to your home. This can be significant if the landlord wants to evict you from the property.
- Reduced revenue: Landlords may face a higher turnover rate with month-to-month rentals. This can lead to an increased number of vacant units at any given time and reduced revenue.
Takeaway
- A month-to-month rental is a lease agreement with recurring monthly terms and no end date.
- Month-to-month rental may offer less or more protection than a fixed-term lease for tenants.
- Month-to-month rental can occur with or without a written agreement.
- State laws regarding month-to-month rentals and the notice you must provide to evict someone vary.
Source: https://www.thebalancemoney.com/what-is-a-month-to-month-tenancy-5204869
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