What is a Month-to-Month Rental Agreement?
As indicated above, a month-to-month rental agreement is a short-term contract between landlord and tenant. It is typically a flexible arrangement that allows tenant and landlord to make arrangements on a monthly basis. Oregon landlords will commonly offer these agreements to their tenants in lieu of long-term leases. However, just because these agreements are short-term does not make them any less legally binding than longer term leases and contracts . Although both agreements are legally binding, the difference between the two is that month-to-month agreements allow for flexible terms whereas leases do not, so that is one of the major reasons why landlords offer this agreement to tenants because it gives them more flexibility.
For instance, either party can get out of the agreement by giving the other party a 30-day written notice of their intention to terminate the agreement. A month-to-month rental agreement is the landlord’s way to keep their options open in terms of commitments to tenants. In addition, it allows the landlord to change terms of the agreement by sending a 30-day notice to the tenant.
Characteristics of Oregon Month-to-Month Rental Contracts
Under Oregon law, a month-to-month rental agreement is a rental agreement that continues to renew until the landlord or tenant gives notice to terminate or until the tenant remains in possession for one month after the expiration of the rental period.
Similar to Oregon fixed term rental agreements, the statute allows the parties to agree to rental terms concerning the rental amount and services to be provided by the landlord and tenant. The statute does not define the length of the rental period in a month-to-month tenancy, but it may be any period between one day and 364 days. Therefore, a month-to-month rental period may be for one day or for 364 days.
Another Oregon statute allows parties to a tenancy, including a month-to-month tenancy, to agree on one-month, 60-day or 90-day written notice to terminate the rental agreement. This right to agree on shorter notice periods does not apply to certain notices such as notices when a tenant or neighbor is threatened with imminent harm or the landlord intends to enter to make emergency repairs. If the parties do not agree in writing to a shorter notice period, the notice periods enumerated below will apply.
Notice shall be given as follows:
- If rent is payable by the week, at least one week before the end of the weekly period.
- If rent is payable other than by the week, at least 30 days before the periodic tenancy expires. A periodic tenancy of 10 days or less requires 10 days notice.
- If the termination is in retaliation of a tenant, less than 20 days notice may be given.
A landlord wishing to terminate a month-to-month tenancy must deliver a termination notice by personal service, delivery to a person of suitable age and discretion at the tenant’s place of residence or by certified mail.
Pros and Cons for Landlords
In Oregon, as noted above, a landlord may require a notice of at least thirty (30) days from the tenant before terminating the tenancy when the agreement is month-to-month. The largest advantage of a month-to-month rental agreement is the flexibility it gives both landlords and tenants that want to have more flexibility in their arrangement. For example, if a landlord expects that the tenants will only be in the unit for six months, then a month-to-month rental agreement is ideal until the unit becomes vacant and renovated to be rented out on a new one-year agreement. Another example of using a month-to-month rental agreement is if a tenant has temporary employment in Oregon. In this case, a one-year rental agreement could be a disincentive to sign the agreement because the tenant will need to give a full thirty-days notice; however, with the flexibility that comes along with the month-to-month rental agreement the tenant could easily vacate without much of a penalty.
The disadvantages of a month-to-month rental agreement include that there is no longer a long-term commitment from the tenant. For example, if a landlord is renting out a unit for two years and then the tenant decides to terminate the tenancy after eighteen months, the landlord will have to find a new tenant sooner than expected. Also, months-to-month rental agreements are inherently less secure for the landlord who cannot predict the amount of income that the rental property will bring in, and may have to budget for a vacancy or some small days lost to renovations.
Potential Benefits and Dangers for Tenants
The freedom that comes with being able to move on a whim and the lack of obligation to renew every year creates both profound benefits and significant risks for tenants under an Oregon month-to-month rental agreement.
The first, and arguably, best feature about being a month-to-month tenant is your ability to find a new place to live at a moment’s notice should your current residence become obsolete. For example, maybe your job has laws or regulations that require you to move? Or perhaps your landlord wants to sell the house when it becomes vacant? Either way, the monthly tenancies are beneficial to tenants because they allow you to expand, decrease or change the homes you and your family reside in.
Also, and perhaps more importantly, you do not have the same obligations as long-term tenants. In other words, you’re free from long-term problems like troublesome repairs and rent increases resulting from renewed lease agreements. Rather, the terms of your tenancy are subject to current laws and the terms of your agreement with your landlord.
However, you also have limited protections during your time in a rental property. For example, a landlord can increase your rent at any time (after the proper notice has been given), and when deciding if you should be evicted, a judge will base their decision solely on the specific facts of your situation. In addition, while you are not required to renew your agreement, the landlord may raise your rent to the extent which makes it impossible for you to continue paying, thus forcing you to leave your home.
Notice Requirements and Termination Procedures
On termination of a month-to-month rental agreement, the landlord or tenant shall be obligated to follow the procedures outlined in ORS 90.427.
(a) If the rental agreement has been in effect for up to one year, a thirty-day notice of termination is required
(b) If it has been in effect for more than one year but less than two years, a sixty-day notice is required
(c) If it has been in effect for more than two years but less than three years , a ninety-day notice is required, and
(d) If it has been in effect for more than three years, three months’ notice is required.
Both the landlord and tenant must provide the notice not later than the last day of the period for which the rent is paid (excepting rent paid semi-annually, quarterly or otherwise; then notice must be given on or before the date that the rent is due).
How to Write a Month-to-Month Contract Lease
From a legal standpoint, a month-to-month rental agreement must comply with Oregon’s statutes concerning rental agreements and leases in order to be enforceable. The rental agreement should begin with title "Rental Agreement" or "Lease Agreement."
The agreement should then begin with the names and addresses of the parties to the rental agreement. Specifically, the agreement should note that the rental unit belongs to the landlord and list all occupants by name. This clarifies both the landlord and tenant’s understanding of who legally occupies the rental unit.
The rental agreement should state the date on which the rental unit will be available for occupancy by the tenant, as well as the amount of rent due and how it is to be paid. For example, a credit card may be an acceptable form of payment so long as the tenant’s rent is not raised due to surcharges incurred by the landlord for accepting and processing the credit card information.
It should include the terms of the rental agreement, including the rules that govern the property through any accessory documents. For example, if the tenant is expected to follow association rules, the rules should be included or referenced in the rental agreement.
Finally, the agreement should state the grounds for eviction as well as a provision for disbursement of the security deposit at the end of the tenancy. Each of these terms is essential to drafting a month-to-month rental agreement that complies with Oregon’s landlord-tenant law.
By including all of these critical terms in a month-to-month rental agreement, the landlord and tenant can avoid being surprised by any secret or hidden costs. Furthermore, a clearly worded rental agreement lessens the chance of a legal dispute over the terms of the rental unit and its occupancy.
If you need help drafting a legally enforceable month-to-month rental agreement in Oregon, contact our office for assistance.
Common Month-to-Month Problems and Resolutions
The common issues that arise in the month-to-month rental situations vary. It might be something as simple as payment. For example, if the payment does not go through for whatever reason a landlord may issue a notice of non-payment and could be the grounds to terminate the agreement. Another issue might be damages. This could include unpaid utility bills, property damages, even possession at the end of the term of the agreement, and any sort of illegal activity at the premises.
Dispute resolution procedures are typically built into Oregon rental agreements as it is the law in Oregon. Landlords are restricted in how they can evict a tenant or terminate an agreement. There are specified legal reasons for terminating any sort of residential rental agreement under Oregon law. As explained previously, either the tenant or the landlord may terminate the lease without cause provided proper notice requirements are provided. Additionally, the landlord must provide the tenant with a specific legal reason for the termination.
Mediation is often a way that many landlords and tenants resolve disputes. There are also dispute resolution services that can help. However, sometimes a lawsuit may be necessary. There are restriction and limitations on both landlords and tenants in a lawsuit. While waivers of certain terms are permissible, the waiver may not violate any other law and cannot unfairly limit the remedy for his or her breach of the rental agreement.
Oregon Month to Month Rental Agreements FAQ
Do Oregon month-to-month rental agreements have to be in writing?
The State of Oregon allows verbal rental agreements, but landlords and tenants are strongly encouraged to put their agreements in writing. By documenting the terms of the arrangement, there is no question as to what is required by each party. This also provides a written copy for future reference about each party’s responsibilities. In all transactions where money is exchanged, it’s best to have it in writing.
What are the requirements for terminating a month-to-month rental agreement in Oregon?
The notice required depends on how long the tenant has lived at the property. If the tenant has lived at the property for less than a year, only a 30-day notice is needed . However, if the tenant has lived at the property for over a year, the landlord will need to give a 60-day notice. The time period is counted from the day rent is collected and is not based on the calendar month.
For example, if rent is collected on the first of each month, a 30-day notice could be served on May 1st, and the landlord could terminate the agreement on May 31st with the tenant’s final day being the last day of May.
Can a landlord raise the rent during a month-to-month rental agreement in Oregon?
Yes, a landlord can raise the rent with sufficient notice. However, the notice must be 30 days for those who have lived at the property for less than a year, or they must provide a 90-day notice for those who have lived at the property for more than one year.