Advantagse and Disadvantages of Annual and Month-to-Month Leases for a Landlord

There are two types of Leases:  Annual and Month-to-Month.   While both are beneficial for a Landlord, our office recommends an Annual Lease.  Therefore, if you are a Landlord and have questions about the type of lease that best protects you, contact the Law Office of Brian P. Kowal, PA.

Month-to-Month Lease 

Advantages

  1. A Landlord can Terminate the Lease by giving 15 days Notice.  However, it must be given 15 days prior to the beginning of the next rental period.
  2. Allows a Landlord to remove a problem Tenant.  In other words, if they have a Tenant that constantly violates non-monetary terms of the lease, they can remove them without a reason.  In other words, they can provide them notice that the lease is terminated without discussing the violations.
  3. Increase the Rent in a shorter time period. Unlike a Annual Lease, you can raise it by giving less than a month’s notice.

Disadvantages

  1. Less time to find a new Tenant.  This can result in a loss of rental income.
  2. A Tenant can break the Lease by giving 15 days notice.   Unlike an Annual Lease, there is no Liquidated Damages Clause.
  3. More wear and Tear since Tenants move in and out of the property.

Annual Lease 

Advantages

  1. Landlord has more stability.  They know that the Tenant cannot terminate the lease at the end of the month.
  2. Landlord does not need to spend money to re-rent the property after a month.
  3. Usually contains a Penalty known as Liquidated Damages.  Therefore, if the Tenant wants to terminate the lease early, they have to pay 2 months rent.

Disadvantages 

  1. If they do not get along with the Tenant, they will not be able to remove them until the lease terminates.
  2. The Landlord cannot raise the rent.
  3. If a Tenant vacates and the Landlord is only allowed to rent it once per year, it will remain vacant until the Lease Terminates.

Annual and Month-to-Month Leases provide advantages and disadvantages. However, the Law Office of Brian P. Kowal, PA recommends a yearly lease because it provides more stability for a Landlord.  If you are a Landlord and have questions about month-to-month and annual leases, contact our office at (954) 990–7552.