What You Need to Know About Month-to-Month Leases: Advantages, Disadvantages and Common Terms

Defining a Month-to-Month Lease

A month-to-month lease agreement is a rental contract with a variable lease term, typically lasting 30 days but not set in stone. As the agreement’s name implies, either the tenant or the landlord can terminate the agreement with just 30 days notice. When a renter and a landlord agree to a month-to-month lease agreement, they’re deciding that they don’t want to enter into a fixed lease term. While written lease agreements are very common, there may be instances where a month-to-month lease agreement is the more desirable option, since they offer flexibility to both the landlord and the tenant.
A month-to-month lease agreement is essentially the same as a fixed-term lease agreement, except for the fact that the lease payment, which is also known as the rent payment, may change from month to month . In most cases, it does not change, but can vary by agreement. The main difference between a month-to-month lease agreement and a fixed-term lease agreement is that a lease payment amount in a fixed-term lease cannot be changed for the duration of the lease term.
In many ways, a month-to-month lease agreement has similar terms to those of a fixed-term lease agreement. For example, the tenant typically pays a security deposit prior to moving in, the landlord may request information about the tenant’s employment or rental history, and the tenant agrees to live by all rules and regulations set forth in the rental contract.
In most cases, the only difference between the two rental contract types is that the tenant or the landlord can give 30 days notice to terminate the agreement when a month-to-month lease agreement is involved.

Advantages of Month-to-Month Leases

For many tenants and landlords, flexibility is a primary benefit of month-to-month leasing. The parties can often fix many issues, without negotiating a longer lease. For example, perhaps a tenant can afford $2,000 per month, as long as he doesn’t have to change jobs. While the job offer remains tentative and uncertain, the lease gives the tenant a degree of assurance that he can accept the position or hold out for something better.
For the landlord, the month-to-month agreement means that he can readily meet the market – if rents go up, he can increase the price. By contrast, the longer-term lease may make it impossible for the landlord to earn more, and often increases the friction between landlord and tenant.
Not only can either side change the terms quickly, the easiest first step is a short lease. If a party imposes onerous, costly demands, the tenant or landlord can always propose a longer term. For example, if the landlord wants the tenant to pay $2,000 per month based on the rental rates in the neighborhood, but his investment adviser suggests $1,800 as a fair rate, the tenant can counter with something in between. In that example, the parties do not have to change the rent immediately, making the transition much easier.
Moreover, the negotiations on renting rates can include provisions that make the next lease less contentious. For example, the landlord may more willing to accept a co-signor or a roommate, in lieu of a larger security deposit.

Disadvantages of Month-to-Month Lease Agreements

While month-to-month lease agreements are a great option for landlords and tenants for the flexibility they provide, these agreements also come with a few drawbacks that may not make them the right option for everyone.
Uncertainty
For many landlords and tenants, the biggest potential disadvantage of a month-to-month lease agreement is uncertainty. With a traditional lease, both landlord and tenant can count on the other person to hold up their end of the bargain for at least the span of the lease agreement, which is often six months or a year. With a month-to-month lease, there’s always the chance that the other party will choose not to renew the lease at any point, which could create problems if you have committed to plans based around that lease.
Potential for Rent Increases
While the landlord is required under the terms of a month-to-month lease to give the tenant proper notice before raising rent, this can cause anxiety for the tenant, who will be aware that it is within the landlord’s rights to do so at any point in the future. Likewise, there will always be the possibility that the rent could go down if the landlord chooses to cut prices to fill an empty unit faster. For these reasons, a month-to-month lease may not be a wise choice for long-term renters who prefer constancy.
Lack of Long-Term Security
Most landlords like to have assurances that a tenant will be reliable over the course of an entire lease term, which gives them a sense of security for the long-term. With month-to-month leases, these long-term security measures are not in place, leaving landlords with little recourse for a tenant who may decide to disrupt the standard day-to-day running of their building.

Common Terms in Month-to-Month Leases

Month-to-month leases will commonly include clauses that the parties will expect are included and are important to keep in mind. The lease agreement will usually include terms pertaining to:
Notice Period State laws will likely include a clause stating that notice must be delivered in order to terminate the lease and vacate the premises. The notice will specify the amount of time that will be afforded to to vacate which could be anywhere from 30 days to 60 days, and in some circumstances, even 90 days after giving notice. For instance, California’s Civil Code 1946.1 will require a notice period of 30 days unless the tenant has occupied the residence for more than one (1) year, in which case, the notice period stated in the lease will apply with a minimum of 60 days and a maximum of 90 days. There may also be additional rules regarding another extent of a notice period requirement, depending on city ordinances, so it is important to check those as well if you are in a different county or city in the state. In California, the party giving notice must do so in writing, even if it is waived in the lease agreement. Thus, if a tenant plans to vacate at the end of their lease’s expiration, they will need to provide at least 30 days written notice to the landlord. Likewise, the landlord will need to provide notice of termination to the tenants in writing as well. Although carriers will always be presumable, it is important to make sure that notice is delivered successfully. If it is delivered by hand, you will want to check the lease for requirements such as the need for a witness and/or a co-tenant to be present when hand delivering , and you will also want to keep the receipt provided by the hand delivery service and/or have the recipient confirm in writing that they received the notice. If the notice was sent via certified mail, it is important to keep the receipt for the mailing. If it was sent via email, it is best to get a confirmation that it was delivered or read from the recipient. These can be helpful documents and emails if a dispute arises and it goes to court.
Rent Payment Terms It is not uncommon in month-to-month lease agreements to have a clause stating that the rent payment terms can be amended without the parties’ consent, however, giving the tenant some advance notice to allow them time to adjust seems to be a more common situation. It could just be a verbal discussion between the landlord and tenant with an email sent to one another confirming the adjusted rent amount, and the landlord will then keep a copy of the email confirmation for their records. Alternately, if the lease needs to be formally amended, both the landlord and tenant will simply sign the amendment and keep copies for their records.
Term Clause The lease may also contain a term clause, which states that if the rent is not paid for a certain period of time, then the month-to-month will terminate and will then immediately become a tenancy at sufferance, which can be terminated at the landlord’s discretion. A term clause can also include a definition for a default, such as failure to pay rent, or it could be less specific. To terminate the month-to-month lease, a notice will need to be delivered under the statutory terms.

Converting from a Fixed-Term Lease to a Month-to-Month

While the fixed-term lease is usually deemed the most favorable agreement for both tenants and landlords from a legal standpoint, there are times when the lease should or must transition to a month-to-month rental agreement. Most commonly, a tenant may have a lease that is about to expire and wants to stay in the same residence, but will not commit to another one-year lease and, thus, the lease agreement must transition to the month-to-month agreement. If a tenant informs the landlord that he or she wants to stay, it is incumbent upon the landlord to prepare a month-to-month rental agreement. Absent such a request, landlords living in certain states may regard the expiration of the lease as sufficient notice to terminate the lease. Both parties with a month-to-month agreement must give the appropriate advance notice to terminate the agreement. The advance notice period is usually either one month or 30 days.

Tenant Rights and Legal Guidelines

In most states, landlords and tenants are not required to enter into a formal written lease for rental terms under one year. Instead, they can agree verbally to "give it a go," reserving the right to terminate the tenancy after a specific period of time. Such is the case in Oklahoma, which expressly recognizes the validity of leases "for a period of less than one year, though made in writing, or from month to month, by parol, unless the same shall be reduced to writing."
However, what happens when such a lease is placed in writing? A question arises pertaining to the Statute of Frauds, which requires certain types of contracts, such as those pertaining to the sale of land, to be in writing to have any legal effect. That means that verbal month-to-month agreements generally can’t be enforced in court if the terms are not fulfilled.
Oklahoma’s Statute of Frauds, 41 O.S. § 11, makes the exception clear: "That the following agreements shall be void, unless the same, or some note or memorandum of it, be made in writing, and signed by the party to be charged therewith or some other person by him thereunto lawfully authorized:

1. An agreement that by its terms is not to be performed within a year from the making thereof."

Because there are no longer any lease terms involved , a month-to-month lease agreement would be considered an exception to the Statute of Frauds, making it enforceable without a written document.
However, certain state statutes or municipal ordinances may impose requirements for a written lease that, if not fulfilled, will result in an unenforceable lease agreement. In Oklahoma, 41 O.S. § 32 requires landlords to give verbal or written notice to tenants at least "one rental period" before terminating a tenancy, even if the lease agreement itself doesn’t require a notice prior to moving out.
If a month-to-month lease is created without fulfilling this requirement and the tenant continues to pay rent, the landlord can’t terminate that tenancy until a notice has been given.
In other states, however, a written lease agreement does not supersede verbal month-to-month agreements, and the terms can be considered enforceable with the provision of proper notice.
These considerations are especially important where local rent control ordinances exist or the rental residence is situated in a condominium, cooperative housing, or a development that is subject to the provisions of the Oklahoma Uniform Common Interest Ownership Act.