The rental agreement: one-year lease vs. month-to-month

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The rental agreement: is it better to sign and commit to a one-year lease or are you better off going month-to-month? Landlords could offer you either, and there are pros and cons to each. Reviewing these advantages and disadvantages will help determine what kind of lease is best for you.

One-Year Lease

Most landlords want a minimum commitment. There are costs and time investments a landlord has to absorb every time a tenant changes, so most landlords and property managers ask for a one-year minimum lease. Some landlords may ask for a minimum of six months. Some landlords may offer a two-year lease.

A yearly rental agreement will run for a full 12-month period. Essentially, your one-year lease will continue on as a month-to-month lease once the year is up. Your landlord may want to sign another lease at the end of the term, but there is no obligation to create a new lease. Terms remain the same – though rent can be increased. The one-year lease can be terminated by either party with sufficient notice, but you could be forced to pay out the lease if you terminate it before it is up. If you're going to sign a one-year lease, you need to be sure the apartment is right for you – you could become trapped in a bad situation, limiting your freedom if you are unhappy with the place or if life changes require you to move. If you want to leave before the year is up you could be responsible for paying out the rest of your lease. A lease is a legal contract, your commitment is legally enforceable.

One-year leases are more common, provide stability and could be slightly cheaper than short-term rentals agreements. They’re perfect for those who want to stay a while and make themselves at home-sweet-home. They guarantee that, unless you do something horrible that would get you evicted, you cannot be asked to leave.

Month-to-Month

A month-to-month rental agreement lasts for one month at a time, automatically renewing itself unless you or your landlord submit the appropriate notice to terminate the tenancy. They are generally more difficult to find as most landlords prefer annual leases as they reduce the frequency of having to find a new tenant and incurring the associated expenses. The longer and more stable the tenant, the less chance of the landlord being left without a tenant for a month and losing rental income.
Month-to-month, and even week-to-week tenancies are common, but may be harder to find. The rent might be slightly higher for a short-term lease and your landlord can be as non-committal as you might be.

A month-to-month lease is perfect for those who are unsure about the future and do not want to lock in to a major commitment. You’ll have way more flexibility if you suspect a move is in the near future. Students and those who relocate for work quite often will find that these shorter terms are more advantageous, giving them the freedom to move on when it suits them.

Top Image: "Residential Lease Agreement with Pen" by Rental Realities is licensed under CC BY 2.0