Leases: Fixed Term or Open?
pros and cons
A rental lease contains all the important terms and conditions for renting a property and range from fixed-term to open or month-to-month.
Which type of lease is best for you?
A fixed-term lease refers to a rental lease with a designated start and end date. A term lease will begin on a specific date stated in the rental agreement. At the end of the term, the tenant will either move-out on a specified date or the term lease will transition to a month-to-month lease. The lease should provide explicit details on what happens at the end of the term lease. Tenants may be offered a renewal option at the end of the lease term or even before. The renewal can be for a fixed-term, similar to the original lease, or the renewal can be for a month-to-month lease. Lease renewals are often accompanied by a rent increase.
PROS OF A TERM LEASE
- Fixed Rental Rate
During a term lease, a landlord cannot change the rental rate and tenants have full tenure to the property during the term even if the property is listed for sale or is sold.
- Set Lease Terms
Rules, terms, or conditions cannot be changed.
- Guaranteed Occupancy for the duration of the lease.
CONS OF A TERM LEASE
- Complicated to move if your situation changes and you break the lease
- You could be liable for any unrented months remaining plus buy out fees
- Forced to live with bad…neighbors/management/appliances/etc until the lease ends
In a month-to-month lease agreement, tenancy and lease terms typically renew automatically at the end of each month. The amount of notice required to change a lease term or to end tenancy is usually 30-60 days but vary from Province to Province.
- Easy to Change the Lease Terms including rates with appropriate notice
- Easy to Move or Ask a Tenant to Move Out with legal notice requirements
CONS OF A MONTH-TO-MONTH
- Risk of Unplanned Vacancy which is undesirable especially during slow winter months
- Rent IncreasesMonth to month lease more targeted for unexpected rent increases
Both fixed-term and month-to-month lease agreements have their pros and cons for landlords, booking/rental Agents and renters.
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