Month to Month Rental Agreement

Home » Agreement Articles » Month to Month Rental Agreement

Month to Month Rental Agreement

Brief Introduction About the Month to Month Rental Agreement

A property owner who has a vacant residential property and other parties who want to use the premises by paying rent enters into a formal relationship. The agreement legalizes this relationship by specifying the terms and conditions that have complied with the parties to the agreement. As the name indicates, the agreement is entered only for a month. The duration being short term is the differentiating feature of this agreement.

This type of agreement offers flexibility to both the landlord and the tenant. The landlord can assess the credibility of the tenant, and consider continuing him for a long term contract. The tenant, on the other hand, is able to change his preferences if the property does not suit his comforts. The agreement is typically a “trial period” agreement that is likely to become a long-term agreement depending upon the harmony of the relationship between the property owner and the tenant.

Who Takes the Month to Month Rental Agreement? – People Involved

The parties included are:

  • Landlord or property owner or homeowner who owns a residential property, and who wants to let out the same on a rental basis.
  • Tenant who intends to use the residence on a monthly rental basis. Students and transient workers who stay in a place for a shorter time are benefited from this agreement.
  • Guarantor – When the tenant is not financially stable, the landlord may require a guarantor to sign on his behalf in case of any default by the tenant from this agreement.

Contents of the Month to Month Rental Agreement

  • The agreement is not only simple in its feature but also simple by paper. It does not normally include all the terms and conditions a long-term contract or annual lease has. The essential contents of a month to month rental agreement are as follows
  • The name and address of the landlord, name of the tenant, and his educational or employment address for communication.
  • Details of the premises proposed to be let out – Address of the property, specifications of the property, area let out to the tenant, furniture, and appliances provided as part of the property, common areas of usage in case of multiple sharing of premises
  • Rent – The amount payable to the landlord by the tenant. The rent shall also cover the cost of furniture, let out along with the property.
  • Terms of payment – The due date within which the rent must be paid by the tenant, mode of payment, charges, and interest in case of delay in payment.
  • Insurance and taxes – Normally, it is borne by the landlord in a month to month rental contract.
  • Damages – The responsibility of the tenant if any damage is caused to the property.
  • Eviction noticeEviction notice is a very important clause as a month to month rental agreement does not provide a term of the agreement. The term is very evident by the name of the contract. The landlord must consider including days of providing advance notice to the tenant for evacuation on violation of any of the clauses of the contract.

How to Draft the Month to Month Rental Agreement?

  • The identity of the tenant needs to be established by obtaining the student/employer identity card before entering into the agreement. Since the agreement is on a monthly basis, the landlord should not face difficulty in finding the whereabouts of the tenant at any point.
  • If the premises are proposed to be let out by the property owner to multiple tenants on a sharing basis, due care must be taken to specify the allocated portion of occupation to each of the tenant and the common areas used by all the tenants.
  • It is very important to do proper market research on the value of property in terms of short term and long-term leases. The purpose of the month to month rental agreement is invariably to achieve the benefit of changing market conditions.
  • A guarantor is an important person in this relationship. Since this agreement is entered for the benefit of persons who may not be earning attractive income, a parent or an earning guardian must be there to provide a guarantee to the tenant.
  • The duration of the agreement is a curse in disguise. Since the term of the agreement is nowhere mentioned, the landlord should consider including the time of sending eviction notices in advance to the tenant. The time differs according to the state.

Purpose of the Month to Month Rental Agreement – Why Do You Need It?

The main purpose of having a month to month rental contract is attaining flexibility in every possible aspect, both for the landlord and the tenant. A landlord will always want to maintain his property in the way he will manage. In case of disputes and damages to the property, it becomes difficult for the owner to evacuate the tenant. He is always under a risk of the problem advancing to a legal suit. A short term, month to month contract helps the owner to serve notices in advance to the tenant, and vacate the property with ease.

A property owner, who wishes to have a marginal income from his property, can let a part of his own house. He can simply enter into a month to month rental agreement without getting into the complexities of a long-term lease. He is at his option to lease and own his property whenever he wants. A month to month lease automatically gets renewed every month unless the parties to the agreement wish to terminate. Though termination can happen only after sufficient notice, both the parties are protected from sudden changes, if any. The sole purpose of this contract is to untangle the parties from the restrictive covenants that a long-term lease normally has.

Negotiation Strategy

The tenant can negotiate with the landlord on the amount of rent, by providing information about the market value of similar kind of property. Being in good books of each other is also a negotiating factor which can extend the short-term contract into a long term mutually rewarding relationship.

Benefits & Drawbacks of the Month to Month Rental Agreement

The benefits of the agreement are

  • The much-mentioned one – flexibility!
  • The landlord is protected from the risk of being underpaid. Also, a sudden increase in rent may be a stressful option for the tenant. The landlord can get a new tenant with the current market rent he can reasonably get.
  • The property owner is bound by the terms of an annual or long-term contract. In case of a short-term contract, he can get out of it when he is financially stable and use the property for his own purpose.
  • The tenant gets a leeway in terms of furnished accommodation, staying in the home of his preference and affordable rent.

The drawbacks are:

  • The landlord may not be able to find a good tenant if the property is subject to frequent or continuous vacancy. It may have an impact on the credibility of the property in the market too.
  • The tenant is at the disadvantage of paying high where most of the days, he is out of the property for his work or studies.
  • When the property is let out to multiple tenants, the landlord is always at the worry of damages to the property. And also, it is difficult to hold one person responsible for the damages happened.

[Also Read: Rental Agreement]

What Happens in Case of Violation?

The violation of the agreement can happen in case any damage is caused to the property of the landlord. He may request immediate evacuation of the property(1), which may affect the tenant who has not caused the damage. When the property owner does not provide sufficient notice to the tenant to vacate the property as per the agreement, the termination clause is violated by the owner.

The tenant is at the advantage of raising a suit, and he may deny vacating the property at the owner’s request. If the rent remains unpaid beyond the terms of payment mentioned in the agreement, the landlord may request to pay the rent along with interest and other charges to compensate for the delay.

If the tenant brings additional persons or uses the property beyond the terms of his usage, there is a violation of the agreement, and the owner can require the tenant to comply with the restricted usage mentioned in the agreement. If the client fails to abide by his request, he may be requested to vacate the house, or a legal suit may be initiated against the tenant. Though violation can happen in many ways, both the landlord and the tenant are at the advantage of getting out of the agreement at any point in time by giving proper and sufficient notice.

A month to month rental agreement offers a trial period and pilot test of finding a good tenant by the landlord and getting a good property for the money paid by the tenant. When things go well and build a strong relationship between the property owner and the tenant, it can be turned into a long-term lease or yearly lease at any time. It also helps the property owner to assess whether to be in the property business or not, where he owns a large number of properties.

A month to month lease is typically entered for furnished accommodation, so the tenant is relieved from the worry of investing in buying furniture and appliances. He is also free from the difficulties of shifting them from one place to another, where his stay is short in a particular place. Thus, the agreement sets the parties to the agreement free from the hassles of long-term contracts and lengthy contract papers.