Switching to Month to Month Leases for Covid

[Phillip Davis]

Hey friends, this is completely me thinking out loud through the forum and seeing what others think. With all the current regulations being implemented to stop evictions around the country, has anyone thought about trying to modify current leases or start new leases on month to month terms instead of long term so that landlords would be able to remove tenants not paying and not be locked into terms without being able to evict? Just a passing thought that I was thinking about going forward, suggestions? Thoughts?

[Kyle J.]

@Phillip Davis  There's definitely some advantages to landlords in having tenants on month-to-month agreements vs year-long leases, even in normal times.  Almost all of my tenants are on MTM agreements.  It gives me much more flexibility in regards to when I can raise the rent or change the terms of the tenancy.  

It could be even more important to have tenants on MTM agreements now with the way many jurisdictions across the country are banning/suspending evictions.  While Aaron is correct that if you terminate a MTM tenancy and the tenant refuses to move you still have to go through with an eviction (unlawful detainer) to recover possession of the property, here's the big difference between a MTM tenancy and a tenant on a year-long lease right now...

Let's say you have a tenant 6 months into a year long lease who stops paying rent.  Normally, this would be a clear-cut eviction case for non-payment of rent.  However, many jurisdictions have implemented a moratorium on evictions for the non-payment of rent.  In the county where I invest, you would not likely get the tenant out for the remainder of the lease term, even if the tenant never resumed paying.

However, suppose this same tenant was on a MTM agreement.  Instead of addressing the non-payment of rent, you could instead just issue a 30 day notice to terminate their tenancy.  Then, if they didn't leave, they'd be a holdover tenant.  You could then potentially proceed with an eviction to remove them for being a holdover tenant, since the executive order in that county only suspends evictions for non-payment of rent.  Then, after getting the tenant out, nothing would prevent you from going after the tenant in small claims court for the past due rent they owed you.  So you'd still have options to recover your money, if you chose to go that route. 

In my opinion, MTM agreements are just much more advantageous to the landlord all the way around.