Month-to-Month vs. Fixed-Term Lease Agreement: Pros and Cons

March 30, 2021

Learn the differences between these two major types of leases

One of the most important elements of a lease agreement is the length of the lease which can range from a few years to month-to-month. 

There are pros and cons to both of these types of lease agreements, so it’s important for you to consider and understand both before signing your lease. 

Continue reading as we discuss the pros and cons of a month-to-month and fixed-term lease.


What are month-to-month leases? 

A month-to-month lease is just as it sounds: a lease for one month at a time that usually renews automatically at the end of the month. 

If a tenant wants to move out, the lease will state how much notice must be given, but it’s usually 30 to 60 days.


  • End the lease at the best time. The option of ending the lease at a convenient time works well for both tenants and landlords. A month-to-month lease offers a lot of flexibility and is great for people with unpredictable careers. 
  • No penalties. Whenever you want to move out, you can do so without worrying about the fees and penalties that come with breaking a fixed-term lease. 
  • Protected if living with roommates. If you’re living with a roommate, and they decide to leave during a fixed-term lease, you could be responsible for finding someone to take over their lease or pay the rent in full. A month-to-month lease helps you to largely avoid this problem because you can leave at the end of any month if you can’t find someone to sublease or can’t afford the full rent price. 


  • Costs more. Rent prices in month-to-month leases are often more expensive because the landlord is risking an unplanned vacancy. 
  • Landlord can terminate the lease. Month-to-month leases offer great flexibility for you as a tenant because you can leave the lease any month, but the risk is that your landlord can also end your lease agreement whenever they want. 
  • Lease terms can change. In traditional fixed-term leases, the landlord can only change lease terms and raise rent at the end of the term, but with month-to-month leases, these changes can come every month. 


What are fixed-term leases?

Fixed term leases are the most common type of lease agreements. They’re usually for a year, but can be as short as 6 months or as long as 2 or 3 years. 


  • Fixed rental rate. During the time of your lease agreement, the landlord can’t change the rent price. 
  • Set lease terms. None of the terms in the lease agreements can be changed during the term unlike with month-to-month leases. This means no new fees, rules, or conditions can be added to the agreement until it is over. 


  • Less flexibility. If your situation changes in the middle of your lease term, you don’t have the same flexibility to leave at any month like you would with a month-to-month lease. This makes it difficult if you lose your job or find a new job in a new city. 
  • Fees and penalties. In a fixed-term lease, it can be hard to leave your lease agreement mid-term. Breaking a lease usually comes with a very high fee unlike the no penalty policy of a month-to-month lease. 


Security or flexibility? 

The length of your lease agreement is up to you and your landlord. It ultimately comes down to whether you want security or flexibility with your lease. Do you like the city you live in and are happy with your job, or do you plan on looking for a new job in a new city soon? These are important things to consider when deciding your lease terms. 


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