Choosing Between a Fixed-Term or Month-to-Month Lease

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Choosing Between a Fixed-Term or Month-to-Month Lease

Emily Gojko · Jul 18, 2009

When renting an apartment, you may be given the option of a fixed-term or month to month lease. One is not better than the other. Which to choose simply depends on your situation and housing needs. Learn the difference between the two if you’re trying to decide which is right for you before beginning your apartment search.

Fixed-Term Lease

A fixed-term lease, as compared to a month-to-month lease, is great if you are looking to rent your unit long-term and are in a secure situation. Having a fixed-term lease guarantees you your unit for the term of the lease and may even give you priority treatment when the lease is up for renewal. Your landlord cannot rent the unit to a higher paying renter, or kick you out before the lease term is up. You, however, are also tied into the stipulated term of the lease, though many fixed-term rental agreements give renters an early termination option. This early termination option usually comes with a penalty fee.

A fixed-term lease will also lock both you and the landlord into a rental payment amount, while a month-to-month rental agreement will not. This is great for you as a tenant because, while the future market may demand a higher rent, your rent cannot go up unless otherwise agreed to in the terms of your rental agreement.

Month-to-month Lease

A month-to-month lease is a great choice for students, renters that are saving to buy (and don’t have far to go), people whose jobs move them around, or anyone else that needs the flexibility that a month-to-month lease offers.

Unlike a fixed-term lease, a month-to-month rental agreement does not lock you or your landlord in for a set amount of time. Either party may terminate the lease, usually by giving advance written notice. However, while the fixed-lease requires that the landlord have cause for eviction, the month-to-month lease does not. The landlord can terminate the rental agreement at any time. Otherwise, the month-to-month lease is renewed with each rent payment.

Also, a month-to-month lease does not lock the landlord into a rental payment amount. Unless otherwise regulated by law, the landlord can raise the rent at any time with written notice to the tenant.

Which is Right for You?

If you have a stable job that does not require you to move, are looking for a long-term rental situation and you love everything about the rental unit, then a fixed-term lease is the one for you. If you move around a lot, only need to rent for a short amount of time, expect your personal situation to be changing shortly, or do not have great stability at work, then a month-to-month lease is the one for you. What you gain in flexibility with a month-to-month lease, you lose in the risk of rent increases and rental terminations. What you gain in stability with a fixed-term lease, you lose in the risk of a necessary early termination.

Whatever, the case, make sure to read all of the terms of your rental agreement, and be sure to get everything in writing.

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Emily Gojko: I am a writer, marketer, and manager with a strong background in real estate development and management. I am also a native New Yorker with an obsession for home design shows, so I have personal and professional experience making the most of small spaces, and dealing with good and bad living situations.

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