In both commercial and residential real estate, there are a number of different types of leasehold agreements a tenant and a landlord might come to, some with more formal terms and conditions, and others with no written lease at all. One such agreement is known as a tenancy at will.
What Is Tenancy at Will?
A tenancy at will is a property agreement that can be terminated at any time by either the tenant or the landlord. With this type of agreement, there is no contract or lease, nor is there a specified period of time in which the tenant will remain on the property. These types of agreements are sometimes called an estate at will or a month-to-month tenancy.
“There’s really no periodic terms,” said Brian Boyd, Owner and Managing Attorney at Boyd & Willis, PLLC. “There’s no term of lease. It’s basically saying you can stay here as long as you pay monthly rent.”
Depending on the state you reside in, the terms of a tenancy at will could vary, but in general, a tenancy at will is a month-to-month rental agreement. Usually, a tenancy at will is a verbal agreement, but other times, there might be a written agreement that specifies rental terms like the amount of rent and when that rent is due. However, that written agreement is not considered to be a lease.
Many times, a tenancy at will occurs when a lease term has expired, said Reid Hogan, a Commercial Real Estate Advisor at PropertyCashin.
“If the landlord allows the tenant to stay on without a new lease, they have entered into a tenancy at will. Some leases specify that this will happen,” Hogan explained.
Other times, a tenancy at will might just be an informal agreement with family members, Boyd added.
“For example, say somebody graduates from college,” Boyd said. “They go away, and they come home. That’s effectively a tenancy at will. They are living at home. They may or may not be paying rent. But because they’re of age, and they vacated the premises previously and moved on to college … that’s basically a tenancy at will.”
In this instance, there is no formal written agreement, but the property owners — the parents in this case — allow their adult child to live on the property.
Why Choose a Tenancy at Will Agreement?
There are a number of reasons why a tenancy at will agreement would be beneficial to both the landlord and tenant. For starters, a tenancy at will is very flexible. This flexibility could be a good option for renters who are moving into a place with little notice, or who need a place for a temporary amount of time, likely under one year.
“If a tenant prefers not to be obligated for a long-term lease, or a landlord wants to sell or renovate the property soon, a temporary solution may be best,” Hogan said.
For landlords who are thinking about selling their property and don’t want to be tied down by a year-long lease, tenancy at will allows them to make income while the property is on the market.
Tenancies at will don’t require any of the same formal paperwork as a standard rental agreement, making it easier for both landlords and tenants to terminate the agreement at any time. Landlords also usually don’t need to deal with move-out inspections or security deposits, which makes it easier for renters who can’t afford the extra expenses of moving.
Disadvantages of At-Will Agreements
On the other hand, a tenancy at will agreement can have its disadvantages as well. For starters, a tenancy at will means a lack of stability for renters, as the landlord could ask the tenants to vacate the rental with only a few days’ notice.
Landlords, too, could be left in a bad situation when tenants decide to end the agreement without much notice. Of course, some states might have laws regarding how much notice a tenant or landlord must legally give (most states require 30 to 60 days notice). If that’s not the case, the agreement can end at any time.
Essentially, though, “The disadvantage of a tenancy at will is that one party might be ready to end the tenancy before the other party is ready,” Hogan said.
Is a Tenancy at Will Legally Binding?
Yes, a tenancy at will is legally binding, with protections in place for both the tenant and the landlord.
“Every state, every locale, has landlord and tenant regulations,” Boyd said.
Tenants are required to pay their rent on time, based on the rules agreed upon with the landlord, and the tenant is also responsible for any damage to the property, other than normal wear and tear. Breaking these terms can result in eviction.
For the tenant, the landlord is required to provide a safe environment, as defined by the local laws. Landlords must also provide notice to the tenant before entering the property, with the amount of notice determined by local laws.
“For example, if a landlord doesn’t fix a hole in the roof, and you’re living in Boston right now, and you’ve got all the snow coming through your roof, that’s not really a safe place to live,” Boyd said. “So if you withhold rent, that’s probably going to be considered by the court if the landlord tries to evict you for not paying rent.”
Judges will take into consideration the safety of tenants and the landlord’s responsibility in this situation, Boyd added.
How Is a Tenancy at Will Terminated?
Although there isn’t always a written agreement with a tenancy at will, there is usually some agreement regarding the amount of notice tenants and landlords are required to give one another before terminating the tenancy at will. Sometimes that agreement is governed by local laws, which usually require 30 to 60 days notice. Other times the agreement might be governed by what the landlord and tenant discuss. If the tenant or landlord wants to terminate a tenancy at will, they must give the agreed-upon amount of notice, if one exists.
However, there are extreme circumstances that allow a tenant or landlord to end a tenancy at will agreement without notice. Those circumstances include domestic violence or assault, serious damage to the property, causing problems for neighbors or being at least one week late on rent.
Other situations that lead to termination include the death of a landlord or tenant, or the decision to sell the property, which would nullify the tenancy agreement.
What’s the Difference Between Tenancy at Will and Other Types of Leasehold Estates?
There are several different types of tenancy agreements and leasehold estates, some with more formality than others.
Periodic tenancy is a type of leasehold agreement in which the tenant occupies the property from a specific start date, but there is no end date. Typically, this is known as a month-to-month lease, which automatically renews unless the tenant or landlord gives notice.
Tenancy for Years
A tenancy for years, also known as an estate for years, has a specific start and end date, known as a fixed period. The tenancy could be one year, two years or even six months, depending on the terms of the agreement. Tenants also may have the option of renewing their lease after the end date, in which case the tenant and landlord must enter a new agreement.
Tenancy at Sufferance
A tenancy at sufferance occurs when a tenant is illegally staying on a property past the terms of their lease. In this scenario, the landlord can use legal measures to force the tenant off the property.
A Tenancy at Will Occurs Without a Lease
Essentially, a tenancy at will agreement is an informal, unwritten agreement between the landlord and tenant, which can be terminated at any time. While a tenancy at will provides flexibility, it also lacks stability. Depending on your circumstances, this type of agreement could either be beneficial or highly disadvantageous.