Monthly vs Fixed-Term Rental Agreements: What's the Difference?

When it comes to renting out a residential property, landlords have two main options for creating a rental agreement: monthly rental agreements and fixed-term rental agreements. While both types of agreements have their own benefits and drawbacks, it's essential for landlords to understand the key differences between them to make informed decisions.

Monthly rental agreements, also known as periodic rental agreements, are agreements that are renewed on a monthly basis. This means that the tenant's lease is automatically renewed every month, unless the landlord or tenant gives notice to terminate the agreement. Monthly rental agreements are often used for short-term rentals, such as vacation rentals or student housing.

Fixed-term rental agreements, on the other hand, are agreements that are signed for a specific period of time, such as six months or a year. Once the agreed-upon term is over, the agreement is terminated, and the landlord and tenant are no longer bound by the agreement. Fixed-term rental agreements are often used for long-term rentals, such as family homes or apartments.

One of the main differences between monthly and fixed-term rental agreements is the level of security and stability they provide. Monthly rental agreements offer more flexibility, as the tenant can terminate the agreement at any time with proper notice. Fixed-term rental agreements, on the other hand, provide more security for the landlord, as the tenant is committed to the agreement for the entire term.

Another key difference between monthly and fixed-term rental agreements is the level of notice required to terminate the agreement. With monthly rental agreements, the landlord or tenant can terminate the agreement with a certain amount of notice, such as 30 days. With fixed-term rental agreements, the landlord and tenant are bound to the agreement for the entire term, and can only terminate the agreement with proper notice, such as 60 days.

It's also important to note that monthly rental agreements often come with higher fees and costs for the landlord, such as higher property management fees and higher insurance premiums. Fixed-term rental agreements, on the other hand, can provide more stability and predictability for the landlord, as they know exactly how long the tenant will be in the property.

In conclusion, monthly and fixed-term rental agreements are two different types of rental agreements that offer different benefits and drawbacks for landlords. It's essential for landlords to understand the key differences between these two types of agreements to make informed decisions and choose the right type of agreement for their property.