What’s Involved in a Month to Month Rental Agreement?
For those interested in short-term stability and flexibility of a short-term lease in Wisconsin, a month-to-month rental agreement may be the best option. A month-to-month rental agreement is essentially that, an agreement between the landlord and the tenant, oral or written, whereby either party will have to give notice to terminate the lease by 28 days so the arrangement goes month to month. These agreements tend to be useful for tenants when they are unsure if they will be living in Wisconsin for long periods of time. A month-to-month rental agreement is not a lease but a rental agreement providing general provisions on notice to vacate in the future. Most month-to-month rental agreements in Wisconsin include the following terms: The unique thing about month-to-month rental agreements in Wisconsin as opposed to leases is that the rental agreements can be oral. With a tenancy for a year , Wisconsin Law generally requires a written lease, however, with a month-to-month rental agreement, a handwritten note or even just an email can suffice in place of a written lease as long as the landlord and tenant agree to the terms of the rental agreement. The flexibility of a month-to-month rental agreement is why most Wisconsin tenants and landlords tend to prefer them.
Requirements Under Wisconsin Law
For a month-to-month rental agreement, the law requires either the landlord or tenant to give a written notice to terminate. This is accomplished simply by giving notice to the other party. The law requires that the longest of the following time periods be given: A landlord has no obligation to renew a lease, nor does a tenant have to renew a lease. However, if either wishes to end the rental agreement but comes onto the property of the other, the new law requires a 5-day notice to terminate before entering the premises. If notice is not given, the landlord and tenant are subject to a forfeiture of $100 plus an additional forfeiture of $100 for each calendar day of continued occupancy. A termination notice letter should be sent by both parties to be safe. A notice to end a year lease is likely to be rejected if sent during the middle of the month so that it is ineffective until the end of the next month. A notice to end a month-to-month lease will be deemed effective at the end of 30 days, or lesser period, from the date received by the other party. Also, notice to the landlord must be made to the landlord or his designated agent. Sending it to a tenant or his roommate is not valid, nor is giving it to the caretaker or handyman who manages the building. If the landlord continues to accept rent after notice has been served by the landlord or the tenant, the landlord impliedly agrees to a new rental period for that same length of time as the prior month-to-month lease.
Benefits for Tenants
The benefits of a month-to-month rental agreement in Wisconsin are: 1) living without a contract and moving on twenty-four hours notice, 2) this is a great way to try a new area out before signing a one-year agreement, and 3) if a tenant is interested in buying a home, he can move from monthly to weekly rentals if needed. For example, as an alternative to a $3000 per month apartment for six months while looking for a house, a tenant could rent a unit for $1000 per month (if available) and then get the owner to agree to the tenant moving to $300 per week for the next several months until the house is purchased.
Renting month to month is not a good choice for a tenant who wants to pay a lower rent and stay long term. It also may result in a tenant paying higher rent in certain markets than if the tenant had signed a twelve month lease.
Benefits for Landlords
Month-to-month agreements can present considerable advantages for a landlord in Wisconsin. The landlord can adapt to the market, and start working towards eliminating the tenancy should the market demand another property. Many landlords desire the ability to work towards raising rents. It is not uncommon for a landlord to ask prospective tenants whether they will agree to a monthly rental agreement. This flexibility can be vitally important.
Moreover, the perceived increased freedom that landlords have with a month-to-month agreement can make them much more comfortable with a new tenancy. If the market is demanding a different type of property or a different location or increase in rent, the flexibility of a month-to-month rental agreement can work wonders for the bottom line.
If a landlord understands a tenant’s background and motive for moving in, it is less likely that there will be difficulty in showing a property. You can explain that you might have to show it on short notice. Landlords have an added right in the event of twenty-four hours or greater notice not required by the lease.
Even if all of the negotiating is done in good faith, there may still be some tension between the parties. It is sometimes better to move a tenant out and then back in to the same property, rather than to try and sort out the weeds. In that sense, revisiting the relationship can collapse any animus between the parties.
Downsides
As with many things, there are potential drawbacks to monthly rental agreements that should be considered before entering into a monthly tenancy. As noted above, a month-to-month rental agreement, regardless of how it is entered into, creates an indefinite period of time for which a tenant can occupy a unit. The only way to end the rent obligations of the tenant is to either terminate the tenancy according to the statutes or under the terms of the lease. A tenant must inform the landlord if they plan to vacate in order to avoid being responsible for another month’s rent. While the relatively short notice for a tenant to vacate the premises is certainly a positive for a tenant to consider, it introduces instability and uncertainty to the landlord’s ability to find a replacement tenant and to collect the maximum rent for the unit.
While the property owner remains liable for the rent and associated common area costs during the period of time it takes to replace the tenant, that confidence is unwarranted since each resident takes an independent role in the profitability of an investment. A loss of a tenant represents a loss of income and the longer it takes to replace the tenant, the less profit the owner is able to make. This loss of income occurs even if the tenant gives proper notice to vacate.
Another factor for a property owner to consider is the prospective tenant’s belief about the ease with which a landlord can be pressured to relinquish the rights and obligations under the rental agreement. By extending the lease from a term of six to twelve (or more) months to month-by-month, a tenant may believe that it will be more difficult for the landlord to evict the tenant. In fact, various statutes and case law make it easier for a landlord to evict a tenant by means of an unlawful detainer action. A landlord may seek to terminate a monthly rental agreement without cause and without having the burden of showing the tenant has materially breached their obligations . However, while the actions necessary to terminate a monthly rental agreement are relatively simple, the administration of the appropriate notices can be very time consuming and labor intensive. Moreover, courts generally require strict compliance with the statutory requirements associated with the termination of a tenant based on written notice.
Landlords should also remember that a monthly rental agreement does not guarantee increased income. The definition of a month’s rent is not specific to the calendar month. A month is typically defined as 1/12 of the annual rent, regardless of the calendar date. For example, a monthly rental agreement stipulating rent of $1,500 per month would necessarily mean that a tenant moves into the unit on any day of the month and pays $50 per day for rent. Regardless of when the move-in occurs during a month, the tenant pays only $50 per day and the monthly rent in this example would be $1,500.
Landlords should also be mindful of the right of a tenant to receive their full security deposit, if any, upon the termination of a rental agreement. Section 704.28(4)(d), Wis. Stat., is titled "Month to Month Tenancies." There are no exceptions for this provision of the statute which provides "An owner of a rental unit shall return to the former tenant his or her security deposit no later than 21 days after the day the tenant’s right to occupy the rental unit terminates. In this section ‘security deposit’ does not include any charge for damages, unpaid rent, nor anything else under the terms of a written rental agreement which are eligible to be withheld from a tenant’s security deposit." (emphasis added). In practice this means that for a tenancy created on February 1st a landlord must return to the tenant any security deposit within 21 days of March 1st even if the tenant caused significant damage to the property during the month. Clearly landlords would be wise to enter into a written rental agreement with specific terms regarding the amount of the required security deposit and any and all permitted deductions from said deposit.
Making a Month to Month Rental Agreement
When drafting a rental agreement for a month-to-month tenancy in Wisconsin, landlords should consider several factors. A landlord may enter into a lease agreement for a specific term or duration, in which case the law will consider the duration to be a "term." Rental agreements that do not specify a term are considered "month-to-month" or "tenancy at will" agreements.
Under Wis. Stat. §§ 704.19, 704.19(6) and 704.19(6m), if a landlord or tenant desires to terminate a month-to-month tenancy, the party must provide the other party with at least 28 days’ notice prior to the start of the month during which the tenancy is to be terminated. 28 days’ notice means at least 28 consecutive hours measured from the effective date and time of the notice (when the notice is served and its terms take effect). If a notice of termination specifies the effective date as a day other than the first day of the month, the notice must be served at least 28 consecutive hours before the specified effective date and time together with the first day of the month during which the tenancy is to be terminated.
The terms of a month-to-month rental agreement can be established, and then amended, by the parties. A landlord is not obligated under law to provide a written document setting forth the parties’ respective rights and obligations under an oral month-to-month agreement. Alternatively, a written month-to-month rental agreement is a good idea. There are a number of provisions that landlords should consider including:
Templates for month-to-month rental agreements are relatively easy to find online and many forms are similar. However, it is a good idea to have a real estate and business attorney review your form. Often landlords inadvertently include terms that local ordinances prohibit or are not effectively drafted under the law. It’s best to have sound advice and a lease that has been customized to meet your particular needs. A poorly drafted lease can be problematic and costly later. There are also laws concerning rental agreements that vary depending on the type of residential property, so again, sound advice from an attorney is a good investment.
Disputes
Like any other aspect of law, disputes arising under a Wisconsin month-to-month rental agreement can often be broken down into types. The typical disputes include the tenant’s failure to pay the rent and the landlord’s failure to keep the premises in good condition. Mediation is a common method for resolving disputes outside of court. Mediation is similar to arbitration in that both involve a neutral third party. Unlike arbitration, however, where the arbitrator makes a decision pursuant to mandatory rules and statutes, a mediator is working with parties who have expressly agreed to attempt to resolve their dispute by final, but voluntary decision. In other words, mediation is a facilitated conversation between disputing parties with an eye towards resolving their conflict. Although mediation exists in every state, some states have defined procedures that must be followed. All Wisconsin circuit courts are required to offer or refer parties to mediation as part of the litigation process, so it is unnecessary to list individual procedures here. Any good mediator will be well aware of the governing statutory requirements, and if all else fails, Wisconsin’s mediation chapter may be consulted. If mediation fails and the dispute must be resolved in court, there are essentially four options to choose from. All claims for any monetary judgment of less than $10,000 generally go to small claims court, where the Landlord and Tenant Act will apply. A small claims judge has the authority to award monetary damages, such as the amount of unpaid rent. Claims for eviction or possession (evictions) proceed to the circuit court in a bifurcated proceeding. Where one action involves the right to possession, and the other claims merely money damages of less than $5,000, the landlord will have two actions pending in court simultaneously – one in small claims court for money damages and the other for possession in the circuit court. Tenants do not have any such parallel actions and must appear solely before a circuit court judge to defend an eviction claim. Constructive eviction claims involve the tenant vacating the premises, while still paying the rent. Wisconsin’s Landlord and Tenant Act does not provide for claims of constructive eviction, but Wisconsin common law recognizes claims for constructive eviction and tenants have based constructive eviction claims on Section 704.07(1)(a), the landlord’s duty to give possession of the premises to a tenant.
FAQs
Q: What is a Wisconsin month-to-month rental agreement?
A: A Wisconsin month-to-month rental agreement is a type of rental contract that runs from month to month. In these contracts, the landlord and tenant agree to a rental arrangement that starts at the beginning of a given month and ends at the end of the month.
Q: How is a month-to-month rental agreement different from a yearlong rental?
A: A yearlong rental is a contract where a tenant rents an apartment or home for a year. They are both legally bound for the entire year. A month-to-month rental agreement, on the other hand, allows a tenant to rent an apartment or home for 30 days. At the end of that contract period , the tenant could opt out without having to wait the entire year.
Q: Do I have to give 30 days’ notice to end a month-to-month rental contract?
A: You must provide a minimum of 30 days’ notice to end a rental contract. Your lease may have additional language that says you need to provide more notice. Some leases may specify two months’ notice so be sure to read your lease carefully and understand your options.
Q: Can a landlord end a month-to-month rental contract?
A: Any landlord may end a rental agreement if they gave proper notice. This means they let the tenant know they will end the contract as specified in the lease language. Often, this means providing 30 days’ notice.
Q: Can a tenant end a month-to-month rental agreement?
A: Yes, a tenant can end a month-to-month rental agreement if they provided proper notification. This means they gave the landlord proper notice as outlined in the rental contract. Typically, 30 days’ notice is required, but be sure to check your rental contract.