Month-to-month vs fixed-term lease: differences and notice rules

The two main types of lease

Most residential leases fall into one of two types:

• Fixed-term: the lease has a start date and an end date, such as 12 months. Both sides are generally bound until the end date.

• Periodic, or month-to-month: the lease has no end date. It renews each rental period, usually monthly, until the tenant or landlord gives proper notice. Australian states call this a periodic agreement.

The front page of your lease usually tells you which one you have. Look for a "term" section.

Sample clause (fictional): "Term: This lease begins on March 1, 2027 and ends on February 29, 2028. After the end date, the tenancy continues month to month unless either party gives written notice."

That one sentence tells you the lease is fixed-term, and what happens when the term ends.

How they compare

Rent. In a fixed-term lease, the rent is usually set for the whole term. California's Department of Real Estate (DRE) says the landlord can't raise the rent during a fixed term unless the lease allows it. In a month-to-month tenancy, rent can change with proper notice, subject to local limits.

Leaving. A fixed-term lease is harder to leave early. The DRE notes that if you move before the end of a fixed term, you could owe rent for the rest of the term or until the place is re-rented. A month-to-month tenancy can be ended with the required notice. Our guide to breaking a lease early covers what fixed-term leases usually say about early exits.

Security. A fixed term gives you a known cost for a set time. The DRE says the landlord also can't end a fixed term early unless the tenant breaches the lease. A month-to-month tenancy offers flexibility, but in some places the landlord can end it with notice. Many places limit that with "just cause" or similar protections.

Paperwork. Either type can be written or, in some places, oral. The DRE says a tenancy of more than one year must be in writing in California. A written lease is easier to check later, whatever the type.

What happens when a fixed term ends

This is where many tenants get caught out. In several places, the tenancy doesn't simply stop on the end date.

• Ontario. The Landlord and Tenant Board (LTB) says "the end of a lease does not mean a tenant has to move out." If you pay monthly and don't sign a new agreement, you can stay as a monthly tenant under the same rules.

• British Columbia. The provincial government says a fixed-term tenancy usually can't end just because the agreement has ended. If it isn't renewed, it automatically becomes month-to-month. A clause requiring you to move out at the end of the term, a vacate clause, is only allowed in limited cases, such as a sublet or the landlord or a close family member moving in.

• New South Wales. The Tenants' Union of NSW, a community legal centre, says that if no one ends the agreement, it automatically becomes a periodic (ongoing) agreement when the fixed term ends.

• California and other US states. What happens depends on the lease. Some say the tenancy continues month to month. Others renew automatically for another full term unless you give notice by a deadline. Read the term and renewal clauses together.

How much notice a tenant must give

These are examples only. Check your lease and your local rules.

United States

• California. The DRE says a tenant in a month-to-month tenancy must give at least 30 days' written notice, or the number of days in the rental period, such as 7 days for week-to-week. You pay rent through the end of the notice period. Landlords generally must give 60 days' notice if all tenants have lived there a year or more, 30 days in some cases, and 90 days for some tenancies with rental assistance. Just cause protections may also apply.

Canada (outside Quebec)

• Ontario. For a monthly tenancy, the LTB says a tenant must give at least 60 days' written notice, on the official form, with a termination date at the end of a rental period.

• British Columbia. For a month-to-month tenancy, the provincial government says a tenant must give written notice at least one full rental month ahead, received before the day rent is due. It stresses that this isn't simply 30 days. A fixed term can't usually end early unless both sides agree in writing, special circumstances apply, or an arbitrator orders it.

Australia

• New South Wales. The NSW Government lists 21 days' notice for a tenant ending a periodic agreement, for any reason, and 14 days for a tenant ending at the end of a fixed term. Landlord notice periods depend on the reason.

Other states and territories set their own periods. Look for your local tenancy authority.

How to give notice properly

1. Check the lease and local rules for the notice period and any required form.

2. Put it in writing. Date it, state the date you'll move out, and sign it.

3. Count carefully. Some periods are counted in full rental months, not days, and mailed notices may need extra time.

4. Deliver it in a way you can prove, such as email with a reply, or in person with a signed copy.

5. Keep a copy of the notice and proof of delivery.

6. Plan your move-out. Book a final inspection and arrange the deposit return. Our guide to security deposit return deadlines shows where to find your local rule.

Which type suits you?

There's no single right answer. A fixed term can suit you if you want a stable rent and know you'll stay. Month-to-month can suit you if your plans may change, as long as you understand how much notice either side must give where you live. If you're offered a choice, ask whether the rent differs between the two.

Questions to ask your landlord

• Is this lease fixed-term or month-to-month?

• What happens at the end of the term: month-to-month, automatic renewal, or move out?

• How much notice do I need to give, and how should I deliver it?

• Is the rent different for a month-to-month arrangement?

• If I stay after the term, which lease terms still apply?

See what your term and renewal clauses say

EasyToDecode, launching soon, is being built to read your own lease, quote the term, renewal and notice clauses, flag deadlines you need to put in your calendar, and prepare questions for your landlord. See how it works or join the waitlist to hear when it opens.