Month-to-Month Rental Agreements Explained
A month-to-month rental agreement is defined as a lease where the occupant pays rent on a monthly basis instead of either a daily or a yearly period. The jurisprudence and practice in Texas is that unless a lease states otherwise, a rental period is governed by a month-to-month lease. Thus, a tenant cannot be required to give the landlord advance notice of vacating the property (unless required by the lease) and a landlord cannot recover against a tenant for lease damages until it evicts the tenant in compliance with Texas law.
A month-to-month rental agreement is a common method of offering housing in Texas due to the transient nature of some communities and the social habits of some groups . Seasonally rented "vacation homes;" college dorms; certified homeless shelters; retirement homes; and even upscale apartments are typically offered on a month-to-month basis. A month-to-month rental agreement is common for employees, military personnel, professional athletes, and other groups who require temporary housing.
Texas courts generally favor construction of lease agreements and other contracts as continuing so long as the tenant continues to pay rent and the landlord assures the tenant of continued housing in exchange for payment. Thus, if a tenant seeks to terminate a lease agreement with a period longer than one month, the tenant must give notice no less than one month prior to the end of the term. Conversely, if the lease agreement has a lease term of only one-month, notice of one full month prior to the end of the term is required.
Texas Law Requirements
In Texas, month-to-month rental agreements must comply with the Texas Property Code. This spells out some requirements with which landlords, and tenants, should familiarize themselves.
Notices. Texas law requires landlords to provide 30 days’ notice to terminate a month-to-month rental agreement. Likewise, tenants must provide 30 days’ notice to terminate. This means that the notice must be given at the beginning of the rental period, and that it ends the rental period at the end of the next month. If the landlord or tenant fails to provide 30 days’ notice, and fails to get the other party’s consent to terminate, then the rental agreement continues under the same terms and conditions for another month.
Inside the lease. Just because there is no written lease does not mean that there is no month-to-month rental agreement. Instead, the terms and conditions are interpreted to have been the agreement between the parties, and can be fairly general. The Texas Property Code does, however, establish certain requirements, including framing the arrangement as a tenancy, the landlord’s duty to supply habitable premises, and allowing entry. Just make sure you understand the lease itself, and take care to provide notice when it is time for the relationship to end.
Advantages for Landlords
As with any other lease agreement, there are pros and cons for the landlord when it comes to month-to-month rental agreements.
One of the main advantages for the landlord in a month-to-month agreement is flexibility. Landlords may need to move into the apartment themselves, may want to sell the property that has an uncooperative tenant, or have other circumstances that require a swift change. A month-to-month rental agreement allows the landlord the ability to provide a short notice period of termination. Once the 30 days is up, the landlord can take legal action to regain possession of the rental unit. If, however, the landlord requests a longer period of time, the tenant is free to ask for a new one-year term lease. The downside is that the unit will likely see more tenant turnover and possibly higher costs for maintenance and repairs associated with a higher turnover. The additional cost of repairs and maintenance can be diminished by a good policy on inspections and regulations on mold and pest control for tenants. These items can help reduce the overall maintenance that may otherwise occur when a new tenant moves in. Higher tenant turnover may also mean that the unit is vacant more often and can lead to lost profits as the owner could have a full month without rent for a vacant unit if the tenant gives notice near the end of the month. Responding to your market quickly is another reason why a month-to-month rental agreement may be beneficial to a landlord. As we all know the rental market in Texas is very competitive. In the case of a one-year lease, you could have a start date of several months out and if you plan to get a decent return on your investment you would need to increase the rental price by perhaps 5% to keep up with the rising market. If, however, you have a month-to-month rental agreement you are able to charge a 5% increase sooner which puts you ahead of the market and recoups some of the lost rent while the unit is vacant. It’s important to understand the tenant’s rights under the lease agreement in Texas. It is also important that landlords give plenty of notice and consult with a professional regarding all tenant issues to avoid escalation and put the situation in your favor.
Advantages for Tenants
Despite these concerns, we will now discuss the benefits of month-to-month rental agreements for tenants.
Flexibility
For tenants who value flexibility, the month-to-month rental agreement is ideal. If, for example, you are in the armed forces and may be deployed to a different state or country at any time, or even a different city, a long lease is an impractical option for you. You don’t want to be paying for an apartment you’re no longer in because you signed a 12-month lease and can’t get out of it.
But most tenants probably don’t see this as their first benefit to a month-to-month lease. For example, if the apartment is going up for rent on January 1 but you have until the end of November to decide whether or not you like it enough to stay on December 1, with a month-to-month you are not committed to a long-term lease and you’ve got time to figure out what you want to do. It’s as simple as telling your landlord 30 days in advance that you’re either moving out or signing on for another month (or year).
Stability
But what about stability? This too is a question with a 50-50 answer, depending on the tenant. For the security-conscious the uncertainty of not having a lease can lead to anxiety, especially if neighbors are vandals when they’re drunk or the hallways are noisy. (A good property manager will hand out key fobs rather than physical keys to prevent illegal copies being made.) Tenants know that if their landlord wanted them out, she could give them notice and move in a friend.
When making the decision to choose between month-to-month and a more traditional long-term lease, consider all this: how long do you need to live somewhere? Do you really see yourself staying for a long time, or does the uncertainty of being beholden to a landlord reduce your enjoyment of the property? Month-to-month can be a pain if you’re constantly having to renegotiate your "new" lease terms, especially when prices are going up, but for some people that’s worth it just to enjoy some flexibility in their life.
How to Set Up a Month-to-Month Agreement
The legalities and terms associated with a month-to-month rental agreement can be confusing for landlords and tenants. There are specific steps that must be taken in Texas, as well as certain conditions that can be both beneficial and detrimental to the parties involved.
Any agreement to rent real property is considered a lease, even a verbal one. When agreeing to rent property month-to-month, both the landlord and tenant are advised to comply with a written rental agreement that is signed by both parties. A written agreement will include all of the particulars of the month-to-month rental agreement including:
- parties involved
- lease term start date
- lease termination date
- lease payment due dates
- amount of the rent
- payment method
- whether utilities are included
- security deposits
- pets
- how often the landlord has the right to enter the property
- fees and or penalties
Along with the aforementioned components , a written month-to-month rental agreement between the landlord and tenant should include provisions that help to protect both the landlord and tenant. Many landlords appoint some sort of attorney clients to verify that their interests are covered under the terms of the lease. The attorney client in many states is an automatic process that does not require the landlord to pay the attorney a fee in order to protect their rights as landlords. Because each state has different laws, it is important to remember that an attorney client may not cover every state.
Tenants that are required to pay attorney fees in order to have their rights protected under the written month-to-month rental agreement can find reliable local lawyers who specialize in tenant rights. The tenant could also seek legal counsel from legal aid. If the tenant cannot afford the attorney, they can seek to represent themselves in court.
Common Questions and Misconceptions
One misconception that some tenants and landlords have is that the amount of notice required to terminate a tenancy under a month-to-month rental agreement is one month. However, that is not necessarily true. A one month time frame is simply the minimum notice period. Some landlords require 60 days notice from the tenant, and others accept 30 days or even 15 days notice. The Texas Property Code requires that a landlord receive notice before the end of the "periodic tenancy," which is defined as "the first and last days of the period of tenancy agreed to by the parties." "Periodic tenancy" does not mean "the same length of time as the periodic rental rate." So if the lease specifies rent is paid quarterly, this language means you can get out on 30 days notice every three months.
For example, if someone enters into a lease agreement to pay $1500 rent every four months, then the statutory notice required to terminate the month-to-month tenancy is "one month from the date of notification." This means that the tenant must give the landlord 30 days notice before the end of the lease period for the tenancy to be terminated the day after the lease ends. In other words, 30 days notice is only "minimum notice."
We receive calls from both landlords and tenants asking if they can "evict" the other party from the property if there is a month-to-month rental agreement in place. The Texas Property Code requires that you file a "Forcible Entry and Detainer Suit" under sections 24.001 through 24.013. Most people call this type of lawsuit an "eviction." If your month-to-month agreement is properly cancelled after giving appropriate notice, then the person no longer has permission to live at the property so you likely do not need to file an eviction against the other party. If the other party refuses to leave the property after proper cancellation of the relationship, then the only way you can force them to leave is by filing a Forcible Entry and Detainer Suit with the Justice Court.
Tips for a Satisfying Agreement
Since month-to-month tenancies can evolve into long term leases, both landlords and tenants should be careful to maintain open and honest communications. Just because the agreement is month-to-month, does not mean it is a "free-for-all", where the landlord has no power and the tenant has all of the rights.
In Texas, monthly rent is due on the same day each month. Generally, either the landlord or tenant may terminate the lease by giving written notice to the other. However, the required notice period is 30 days. So, a tenant who plans to leave on November 30 must send their notice to the landlord at the end of September. Likewise, a landlord who wants the tenant to leave on November 30 must send that notice to the tenant at the end of September.
Often, a landlord may ask the tenant to leave for a specific reason, such as by saying "I’m marrying next month and don’t need a roommate." Conversely , the tenant may tell the landlord, "I don’t like the loud music your friends keep playing in the middle of the night."
Unless there is a written lease (or even if there is), these communications between landlord and tenant are not necessarily binding. The only communication that binds them is the terms of the lease which they agreed to abide by when they signed the lease.
The old phrase, "a man’s word is his bond", does not apply when Texas law is involved. So while verbal promises may make for good relationships, they are not enforceable promises. For the tenant, this means that the time to stop paying rent is at the end of the notice period. For the landlord, it means the landlord has no obligation to refund any part of the rent because the tenant did not move out. In other words, the break-up should occur in writing with proper documentation.