What is a Month-To-Month Rental Agreement?
A month-to-month rental agreement is a popular option for landlords and tenants alike under California tenancy law. As the term implies, a month-to-month rental agreement is a rental relationship between a landlord and tenant that is renewed on a month-to-month basis (that is, essentially renews every 30 days, so long as the parties comply with the terms of the rental agreement). The month-to-month rental relationship typically arises when no written rental agreement or lease is in place; in such situations , California tenancy law provides that a month-to-month rental agreement is typically created upon the exchange of consideration for occupancy of the property. The concept behind such agreements is that it provides flexibility and convenience to both landlords and tenants without locking either party into a long-term rental commitment.
The month-to-month nature of the rental agreement means that either party can typically terminate the agreement by serving a 30-day notice to the other party, thereby providing flexibility that may be preferable to some landlords and tenants.
Legal Requirements & Legality in California
In the state of California, month-to-month rental agreements must meet certain legal requirements. For example, any landlord using a written rental agreement for a month-to-month tenancy must provide at least one written copy to their tenant. Similarly, if any landlord verbally agrees to rent a unit from month-to-month, they must provide the tenant with a written copy within 30 days of making that agreement. Naturally, if the rental is longer than one month, the landlord must still comply with the rules detailed above.
It’s not only landlords that have their rights and obligations. In some areas, tenants also have a responsibility to provide a written copy of their rental agreement to the landlord. In Riverside County, for instance, courts will order tenants to provide a copy of any written rental agreement after a landlord demands that the renter mail or hand them a copy. Afterwards, a tenant has 10 days to respond to the court order with a copy of the rental agreement. If they don’t, the court has the option of giving the landlord possession of the rental unit.
Tenant & Landlord Rights
The renters and landlords share many rights and responsibilities. A landlord’s primary responsibility is to ensure that the rental unit remains habitable throughout the rental period. Similarly, a renter owes the landlord a duty to ensure that the premises are returned in the same condition as when they became a tenant.
A landlord must comply with local and state law requirements for providing rental units to tenants. This includes providing each tenant/authorized adult lessee with notice of their "rights," including the "non-discrimination in employment, housing and public accommodations" policy of the State of California (Cal. Gov. Code §§ 12955(a)-(m)). For example, landlords must not retaliate against tenants that have complained about the rental unit, or have attempted to use housing disability assistance dogs. (Cal. Gov. Code § 12955.7). A landlord that retaliates against a tenant for a variety of stated actions would not be compliance. (See Cal. Civ. Code § 1942.5).
In addition, landlords are obligated to provide tenants with a written notice of the "landlord-tenant rights" established by Sections 1942.3 and 1942.5 of the California Civil Code that include, but are not limited to: a one year warranty of habitability; that retaliation for participating in a tenant’s organization is prohibited; that a landlord may not discriminate against a tenant based on age, gender, real estate status, ethnicity, marital status, religion, disability, etc. If a landlord does not comply with these and other requirements, it would be a violation. However, landlords that provide a rental unit to a tenant and return security deposits under the terms of the rental agreement, did not violate the Code.
For example, failure to comply with the security deposit and advance rent provisions of California Civil Code § 1946.1 may result in the landlord/lessor being liable to the tenant/lessee for an amount equal to three times the amount of the security plus the amount wrongfully withheld, costs, and reasonable attorneys’ fees. (California Civil Code § 1946.1(e)(3)(A)(i-c)). Compliance in this example would result in the landlord/lessor complying with the terms detailed in the rental agreement.
Tenant Rights & Protections
The California month-to-month rental agreement provides tenants with certain guarantees regarding notice of increases in rental rates, maintenance, utilities, habitability, discrimination, and notification at the close of the landlord-tenant relationship.
Notice Of Rental Rate Increases
Because they are ongoing, month-to-month rental agreements are generally defined as "periodic leases" under California law. As such, either party to such a lease is permitted to terminate it without cause at the end of each period of tenancy. However, the landlord must give the tenant adequate prior notice if desired rent is to be increased. This may be provided either through an addendum to the lease, or a separate document; however, it must contain specific information in order for it to be enforceable and binding. As of January 1st, 2020, this notice must be given at least 90 days prior to the implementation of the increased rate if it is increasing by more than 10% plus the local rate of inflation as published by the Consumer Price Index for All Urban Consumers (CPI.) For example, if the current monthly rent is $1,000, the landlord is only allowed a $100 increase, regardless of the CPI fluctuation (known as a rent hike under 10 percent + local CPI) in the rent for the same unit. So, if the CPI is up 2%, the landlord may request $20.00 for a total monthly increase of $120.00. If the monthly CPI is up 4%, the landlord may only increase (as mentioned above) $100.00 + $40.00 for a total monthly increase of $140.00 although the CPI is outpacing the monthly rent increase.
Services And Facilities
As long as there has been no specific provision written into the lease agreement, it is up to the landlord to maintain the facilities and services of the premises, including plumbing, electric, gas, elevators, common hallways, and rubbish removal.
Habitability
All properties rented in California must meet local building and health codes, and other general protections for tenants, such as security devices, fire alarms, ballasts, etc. These rules and regulations are enforced by the Department of Consumer Affairs, and buyers can file a complaint through that office if they feel there is a violation of these codes. Discrimination and harassment: A tenant cannot be discriminated against based on the following: All tenants in California are protected against unfair, retaliatory eviction and harassment, meaning that a landlord is not legally allowed to force them to leave due to situations such as prior sexual advances, or race, color, religion, sex, sexual orientation, disability, marital status, source of income and extra-territorial origin. If a tenant has been wrongfully evicted, they can file a lawsuit against their landlord.
Notice Of Termination
When a landlord decides to end the agreement between themselves and their tenant, they must provide the tenant with notice of such termination. This includes providing information about any charges, deposits or rent that is still owed. Tenants are also entitled to a copy of the original lease and all written agreements regarding the written agreement.
Termination & Notice Periods
An initial term is not set for the tenancy; in fact a tenant can remain in the dwelling until either the tenant or the landlord decides to terminate the month-to-month rental agreement. The landlord can terminate the tenancy as provided in statutes as follows:
Three-Month Notice – 90 days written notice (Cal. Civil Code § 1946.1) if:
The landlord seeks termination because the landlord or any immediate family member of the landlord intends to occupy the rental unit.
The landlord seeks termination because a tenant has failed to pay rent due or has violated some term of the tenancy (Note this does not apply to tenants in a mobile home park).
The landlord seeks termination because the landlord has received a government order or local ordinance that requires substantial rehabilitation of the rental unit or the tenant is causing a nuisance or is committing waste.
The landlord is seeking termination because he or she seeks possession for themselves, immediate family members, spouse’s family members, or has received all necessary use and occupancy permits and expects the landlord will begin providing rental housing .
The landlord seeks termination because the landlord is obtaining title to a single-family dwelling or a room occupancy unit in which a tenant is living, following foreclosure.
Sixty-Day Notice – 60 days written notice required if:
A landlord seeks termination with no reason provided
The tenant has lived at the dwelling for less than one year.
Thirty-Day Notice – 30 days written notice required if:
A tenant is living in a unit with an initial rental agreement; and a landlord tries to terminate the tenancy without just cause or reason as set forth in the RSO, or
The tenant is living in a unit where the tenancy began after Jan. 1, 1990, regardless of whatever the initial rental agreement stipulates; and the landlord tries to terminate the tenancy without just cause or reason as set forth in the RSO.
Thirty-Day Notice – Written notice to terminate the tenancy is required even if the landlord and the tenant have a rental agreement or lease for a term greater than one month. An initial rental agreement or lease must require a written 30-day notice of intention to terminate the tenancy unless a longer period is required by the rental agreement or lease. Even if the rental agreement or lease specifies a shorter period, the 30 day required period is required by law.
Common Modifications & Addendums
Whether the California month-to-month rental agreement is drafted as a standard lease or the more streamlined rental contract, it may include one of several modifications or addendums. While all properties are different, these addendums or modifications will not be surprising.
One of the most common modifications is the pet policy. "No pets" is common, but there are many landlords willing to make exceptions for cats or dogs. Of course, a good pet policy includes weight and breed restrictions, as well as stipulating the amount of the deposit and monthly pet rent. With pet-friendly communities all the rage in California, you may find the owner adding a catio or dog run area.
Another common addendum covers the costs of repairs or maintenance for the property’s appliances or utilities. If you’ve ever lived in a home with air conditioning, you may have been required to pay for repairs after the first year of your lease. A similar addendum to your rental agreement can help avoid a surprise after the first month of your new lease. The pet policy can also appear as a separate addendum to the rental agreement.
While not strictly a modification or addendum, you should always receive the rules of the community. Parking is a common issue in both apartments and neighborhood rentals. If you find yourself parking in front of someone’s home or in a space that’s designated for a specific apartment, ask why. After the fact, you may find you’ve violated the lease, regardless of what the verbal agreement was.
A third common addendum covers smoking or drug use. You’ll find very industrious landlords writing their own regulations for drug use, as marijuana is legal both medically and for recreation.
Pros & Cons
When the terms of a California month-to-month rental agreement are acceptable, it provides both landlords and tenants with several advantages and disadvantages. The following section discusses these pros and cons from both the landlord and the tenant’s perspective, as well as how they can be used to maximize the benefits of the month-to-month rental agreement in California.
From the tenant’s perspective, the primary advantage of a month-to-month rental agreement is flexibility. It allows tenants to decide how long they will remain in the residence. If the tenant needs to relocate suddenly for work or family reasons, the California month-to-month rental agreement permits the tenant to provide their notice and vacate the premises without the contract breach if the lease is for a year. From this perspective, the tenant is not locked into the agreement, and can reside in or vacate the unit with a short notice period. However, the flexibility does come at a price. It is likely that rent will increase more often due to lack of security in the housing market, rather than the stabilization offered through a long-term rental lease.
It’s important for prospective tenants to understand that signing a California month-to-month rental agreement does not automatically mean they will have a longer stay in their place. Each month the landlord can increase the rent or terminate the rental agreement. However, most landlords generally view the tenants as reliable tenants. In the majority of cases, there are few issues with the tenants continuing to pay rent if confirmed on the day that the property was rented. With a monthly rental agreement, it is only necessary to inform the tenant when the rent increase will be, unless a long notice period is provided in the owner’s interest.
From the landlord’s perspective, the month-to-month rental agreement allows the owner to maximize their return on investment through increased rents. Because there is no long-term contract with signed renewal at the end of the term, the owner can increase the rent and evaluate market conditions in determining how much they should charge for the unit. The owner also has the flexibility to remove a tenant in the property without having to evict them first. In some cases, the owner may want to sell the property to someone who wants to occupy it themselves. Without a year-long lease agreement, the owner can sell the property without ignoring the lease and still force the tenant to leave (that defeats the purpose of a month-to-month rental agreement), or conduct an eviction action which many tenants are not regarding.
While the month-to-month rental agreement is an excellent choice for many, there are a few limitations. The tenant must still comply with the agreement’s requirements regarding security deposits, payment of rent, and maintenance of the premises. If the tenant damages the unit or fails to pay rent, the landlord can immediately terminate the lease agreement and begin the unlawful detainer in California to evict the tenant without further notice or time to fix the problem. For tenants who have never rented before, this can be an important consideration.
Transitioning From a Fixed Term Lease
While the majority of renters in California occupy fixed-term rental units, there are still a significant number of leases that are either month-to-month and continuously roll over, or at least start off as monthly tenancies and roll over if no action is taken by either party. As described above, a California rental agreement may provide for a lease term of as little as 1 day; however, a lease automatically converts to a month-to-month arrangement once either: (1) the term in the lease expires; or (2) the tenant remains in possession after the indicated lease term with payment of rent due under the original lease terms and conditions. In other words, many fixed-term rental agreements lead to monthly tenancies simply through operation of law without the need for any additional action by either party.
While no term is necessary for a month-to-month lease or in those that convert from a fixed-term lease to a month-to-month lease, the specific amount of notice to terminate a month-to-month lease is important for both landlords and tenants to understand because it is different depending on the situation.
For instance, while a landlord does not need to provide a reason for terminating a month-to-month rental agreement, the amount of notice it must provide varies. To terminate a periodic tenancy to which the landlord and tenant have agreed in writing requires a 30-day advance notice if the tenant has occupied the unit for less than one year, and 60 days advance notice if the tenant has occupied the unit for one year or more. If the parties have not agreed to anything in writing, a landowner may terminate a periodic tenancy for a period of one year or longer with a 30-day notice . If there is an occupancy of less than one year, the landlord must provide a 10-day notice when terminating the tenancy.
Unlike a landlord, when a tenant wishes to terminate a periodic tenancy, California Civil Code Section 1946 requires a tenant to give whichever is longer: (1) an appropriate amount of advance written notice considering the terms of the lease agreement; or (2) 30 days notice if the rent is due on a monthly basis. In other words, if your rent is due on the 8th of each month, and you wish to move out on April 13th, you must give a 30-day written notice prior to the 8th of the month, which would be a March 8th notice to terminate.
As described above, a long-term lease converts to a month-to-month tenancy when it expires and the tenant continues in occupancy of the property in accordance with the terms and conditions of the expired lease. Therefore, when you are in the habit of paying rent on a monthly basis, and makes no attempt to re-negotiate the rent or the terms of the expired lease, it is hard to argue that you have not continued in your habit of paying rent.
In summary, a periodic tenancy does not necessarily have to be documented, as long as the tenant pays rent on a monthly basis and continues in his or her habit of paying the same rent prescribed in the expired lease. Tenants should remember that they also have obligations under the lease, including the return of the keys and the proper cleaning of the unit before leaving, so the smartest course of action is to document the rental relationship so the expectations of both parties are clear.
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