Depending on the aims of both the tenant and the landlord, different forms of leases offer benefits. Learn more about monthly and fixed-term leases.
What you will discover:
When should I consider a fixed-term lease?
When should I consider a monthly lease?
Which agreement is best for a holiday or short-term rental?
What if I merely need parking, storage, or a location for an event?
The choice between fixed-term and monthly leases is critical for both landlords and renters. The language, on the other hand, may be perplexing, especially when it comes to particular sorts of leases, such as those for holiday rentals and parking or storage space. Here are answers to frequently asked questions regarding deciding between a fixed-term lease and a monthly lease.
When should I consider a fixed-term lease?
A renter rents property for a specific amount of time under a fixed-term lease, often known as a term lease. A fixed-term lease may be for any period of time, although the most frequent lengths are six months to a year. Unless the landlord and tenant renegotiate and extend the lease for another period, the lease usually expires at the end of the term. In many jurisdictions, a fixed-term lease automatically transforms to a monthly lease at the conclusion of the term unless either the landlord or the tenant informs the other that they want to terminate the lease.
Because modifying the terms of a lease within the stipulated time is difficult, security is the fundamental advantage of fixed-term leases for both landlords and renters. Because a tenant is compelled to pay rent for the duration of the lease, a fixed-term lease almost ensures landlords that their property will be occupied and providing cash until the period expires. Landlords, on the other hand, cannot increase rents or remove difficult tenants without sufficient reason throughout the lease period.
When should I consider a monthly lease?
A tenant rents property for a one-month period that automatically renews at the end of each month under a Month-to-Month Rental Agreement, often known as a monthly lease. Unless the landlord and tenant expressly agree otherwise, the lease terms continue over from month to month. Unless otherwise specified, most states regard a Lease Agreement as a monthly lease by default.
Monthly leases provide landlords and renters much more freedom than fixed-term leases. During a monthly lease, any party may amend the terms of the lease at any time as long as the other party is given reasonable notice. Most modifications to lease terms require landlords or renters in monthly leases to inform the other party 30 to 60 days before they take effect.
The flexibility of monthly leases helps landlords to deal with unanticipated situations quickly and effectively, such as evicting unpleasant tenants or increasing rent to better reflect economic reality. However, since monthly lease renters are allowed to leave with little notice, there is a danger that a property would be empty while the owner looks for a new tenant. To mitigate this risk, some landlords demand greater rates for the same property under a monthly lease than they would under a fixed-term lease.
Which agreement is best for a holiday or short-term rental?
For short-term or holiday rentals, fixed-term leases are virtually always recommended. Short-term renters typically know how long they will be in your region, whether it is for a vacation or a brief work assignment. A fixed-term lease allows them to use your property for the period of their visit. If short-term tenants decide to remain longer, they may easily sign another fixed-term lease, if your home is not currently rented by someone else.
A formal arrangement, such as a Vacation Lease or Furnished Apartment Lease, may protect both the tenant and the landlord, regardless of how brief a renter’s stay is. Short-term rental leases safeguard the property by setting clear expectations for tenants, such as check-in and check-out hours, cleaning standards, furniture regulations, pet and smoking laws, and deposit obligations. A Move-In Checklist may assist in determining the state of the property prior to the commencement of the lease. Written leases lessen the risk of problems and provide landlords a means to safeguard their assets if they do arise.
A written agreement is required for every short-term rental, whether it is for less than a day, a week, a month, or longer.
What if I merely need parking, storage, or a location for an event?
Leases for a portion of a property, such as parking, a single room, or storage space, may be fixed term or monthly and operate similarly to any other lease. Fixed-term leases, in general, give security and stability, while monthly leases allow flexibility but involve higher risk. The same is true for leasing space for a continuing or recurring event, albeit one-time event contracts should be written for a specified length.
These leases are governed by regulations in certain states or towns. In the event of a dispute, using a formal agreement for a Parking Space Lease, Room Rental Agreement, or Storage Space Lease may protect both the landlord and the tenant.
