Residential Leases: Fixed Term v. Month-to-Month

FIXED-TERM VERSUS MONTH-TO-MONTH LEASES

With residential leases, finding the right kind of lease is a common issue for both landlords and tenants. Each type of lease has their own set of pros and cons. The right lease depends on a person’s particular circumstances and how they anticipate their circumstances will be for the duration of the proposed lease. In more practical terms and in a broader, more general sense, the key issue is the trade-off of cost versus flexibility. The following is a general list of some of the pros and cons of two of the more common residential lease options, depending on most markets:

Month-to-Month Leases:

  • More flexible, in general, for both the parties;
  • May be terminated by either party with a thirty days’ notice;
  • May cost more per month, depending on the landlord, than a fixed term lease;
  • Less potential long-term costs;
  • Less stability; either party, for a litany of potential reasons, could just provide the thirty-days’ notice and terminate the lease;
  • A better fit for people who are uncertain about their long-term plans, whether it’s due to a possible sale of the property, career changes, life changes, school, etc.;
  • A better fit for people who may need to move on short-notice;
  • A better fit if a tenant is concerned about the condition of the property;
  • A better fit for both parties if they have respective concerns, in general, about the other party;
  • Legally easier, usually, for a landlord to evict a tenant;
  • Availability varies depending on the market; certain markets are so saturated, landlords do not typically offer this option.

Fixed Term Leases:

  • more stable for both the parties; both parties should reasonably expect the tenancy will last the listed term on the lease;
  • usually require a thirty days’ notice to terminate near the end of the lease, but the termination provision for a fixed-term lease may be amended depending on the written provision for termination in the written lease;
  • generally speaking, landlords in most markets charge less rent per-month for a fixed-term versus a month-to-month;
  • a better fit for most tenants if they plan on staying in a particular area, long term;
  • a better fit for most tenants if they do not anticipate any need to move quickly for the duration of the lease;
  • in certain markets, especially college towns, this may be the only viable option for a vast majority of landlords given the saturation of tenants, the cycle of moving patterns, and relative scarcity of rental-housing;
  • legally more complicated and costly if the parties wish to terminate the tenancy and if the matter proceeds to an eviction proceeding through the courts;
  • tenants may find it necessary to sublease if they wish to leave early, if their landlord permits them to sublease; otherwise, they may be in breach of the lease and could risk a potentially significant amount of rent being owed;
  • may be more costly, in general, for a tenant if they did need to leave early;
  • Landlords usually have more leverage if a tenant wants to leave early;

Regardless of the type of lease, a residential lease should always be in writing and in compliance with the numerous provisions applicable to residential leases according to Michigan law.

If you need specific legal advice, please privately consult with a lawyer. This blog post is a general discussion about leases, only, and is not intended as specific legal advice. Circumstances vary significantly depending on the parties and areas.

Our office frequently handles this types of matters. For a free initial consultation, feel free to contact us at (517) 507-5077.

For information on Deeds under Michigan Law, click here.
For information on Nuisance claims under Michigan law, click here.
For information on the Summary Proceedings Act, under Michigan Law, click here.
For information on real-estate litigation, notably lawsuits involving homeowners and builders, click here.

For more information on Notices to quit/terminate tenancy, a key form required to be provided to a vast majority of tenants prior to commencing eviction proceedings, click here.