When do I want a fixed-term lease?
Under a fixed-term lease, sometimes called a term lease, a renter leases property for a period of time specified by the Lease Agreement. A fixed-term lease may cover any length of time, though the most common terms range from six months to one year. In most cases, the lease ends at the end of the term unless the landlord and tenant renegotiate and renew it for another term. In many states, a fixed-term lease converts automatically to a monthly lease at the end of the term unless the landlord or tenant notifies the other that they plan to end the lease.
Security is the primary benefit of fixed-term leases for both landlords and tenants since changing the conditions of the lease during the specified term is difficult. Because a tenant is required to pay rent for the term of the lease except in extreme circumstances, a fixed-term lease all but guarantees landlords that their property remains occupied and earning income until the term ends. On the other hand, landlords cannot raise the rent or evict troublesome tenants without just cause during the lease term.
When might I opt for a monthly lease?
Under a Month-to-Month Rental Agreement, also known as a monthly lease, a renter leases property for a one-month term that automatically renews at the end of each month. The conditions of the lease carry over from month-to-month unless the landlord and tenant explicitly agree to change them. Most states treat a Lease Agreement as a monthly lease by default unless it specifies an end date.
Monthly leases provide landlords and tenants with much more flexibility than fixed-term leases. Either party may change the conditions of the lease at any time during a monthly lease so long as they give the other party adequate notice. For most changes, landlords or tenants in monthly leases are required to notify the other party of changes to the lease conditions 30 to 60 days before they take effect.
The flexibility of monthly leases allows landlords to deal quickly and easily with unforeseen problems, such as evicting troublesome tenants or adjusting the rent to better reflect economic realities. That said, monthly lease tenants are free to move out with comparatively little notice, which creates the risk that a property may go unoccupied while the landlord searches for a new tenant. To offset this risk, some landlords charge higher rents under a monthly lease than they would under a fixed-term lease for the same property.
Which agreement is recommended for a short-term or vacation rental?
Fixed-term leases are almost always preferred for short-term or vacation rentals. Whether it is for a vacation or limited job assignment, short-term renters usually know how long they are going to be in your area. A fixed-term lease provides them access to your property for the duration of their stay. If short-term renters wind up extending their stay, they can always sign another fixed-term lease, assuming that your property hasn't already been booked by someone else.
No matter how short a renter’s stay may be, a written agreement, such as a Vacation Lease or Furnished Apartment Lease can protect both the renter and landlord. Leases for short-term rentals protect the property by outlining clear expectations for renters, such as check-in and check-out times, cleaning requirements, rules about furniture, pet and smoking policies, and deposits. A Move-In Checklist can help establish the condition of the rental before the start of the lease. Written leases reduce the likelihood of disagreements arising and provide landlords with a tool to protect their assets if they do.
For every and any short-term rental, whether it is for less than a day, a week, a month, or longer, it is important to draw up a written agreement.
What if I only want to rent out parking, storage, or space for an event?
Leases for part of a property, such as for parking space, a single room, or storage space, may be either fixed term or monthly and work like any other lease. In general, fixed-term leases provide security and stability, while monthly leases provide flexibility but carry more risk. The same applies to leasing out space for an ongoing or routine event, though one-time event leases are best drawn up for a fixed term.
Some states or cities have rules governing these types of leases. Using a written agreement for a Parking Space Lease, Room Rental Agreement, or Storage Space Lease can protect both the landlord and renter in case a disagreement arises.
If you have more questions about what type of rental agreement to use, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.