Fixed-Term Lease vs. Month-to-Month Rental Agreement

By Ron Leshnower. Apartment Living/Rental Expert

Updated September 04, 2016.

There are two types of rental arrangements you can expect a landlord to offer you. Here s a rundown on the pros and cons of each arrangement so you can decide which one is the best option for you:​

1. A fixed-term lease. The most common rental arrangement is a fixed-term lease. The lease states the duration of the tenancy. and when the time is up, you may stay entitled to occupy your apartment only if you renew your lease. One-year and two-year terms are typical, but other arrangements are possible. For example, if an apartment remained vacant for longer than the landlord liked, she might ask you to sign a lease for, say, 15 months instead of the usual 12 months, so that the lease s termination date gets in line with the other tenants leases. Note that this could be for more than just organizational purposes -- for example, your landlord might want your lease to expire during a peak apartment hunting period, such as during the summer.

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1. A month-to-month rental agreement. A month-to-month rental agreement might appear to be a very short version of a fixed-term lease, lasting just one month. But there s a key difference: month-to-month agreements automatically renew if neither you nor your landlord give notice. So, the main advantage of a month-to-month rental arrangement is flexibility. You don t have to worry about breaking a lease in the middle of a one-year or two-year term, which could be costly. Instead, you can end a month-to-month lease any month you wish by giving the landlord notice (usually 30 days).

Keep in mind, though, that your landlord would have this same flexibility. You ll risk getting a notice of nonrenewal at any time, at which point you would then have just 30 days (or a little more, if the landlord gives the notice in the middle of a month) to find a new home.

As you can see, the type of rental arrangement you choose is a key component to consider when looking for an apartment. Make sure you know what you want before beginning your search.