What is the Difference Between a Month-to-Month Lease and a Fixed Term Lease?

Written By Sherry Moldenhauer

The tenant signs a 12 (Twelve) month lease. The lease expires, the lease will continue a Month-to-Month basis. This means that the tenant does not vacate the premises nor will the tenant renew the lease for a further fixed term period.


CAN THE TENANT CANCEL THIS LEASE AGREEMENT BEFORE THE EXPIRY OF THE INITIAL PERIOD OR ANY FURTHER FIXED-TERM PERIOD?

According the Rental Housing Act, The Landlord or Tenant shall be entitled to cancel the Lease on 1 (One) Calendar Months’ notice to the other Party.

Section 14 of the CPA shall not apply to a Month-to-Month Lease, given that it is on a Month-to-Month basis.


WHAT IS A FIXED TERM LEASE?

The Lease Agreement will be for a fixed period from date of Signature of the lease to the date of expiry unless it has been cancelled or terminated in accordance with the terms of the lease.

In terms of section 14 of the CPA, the Tenant (consumer) may cancel the fixed term lease for any reason, during the lease period by giving the Landlord (supplier) 20 (twenty) business days’ notice in writing of such cancellation. If the Tenant exercises this right, the Landlord may charge the Tenant a reasonable cancellation penalty.

The Landlord would need to mitigate his/her loss by factoring in the following:

  • An amount equal to a maximum of __ months rental; plus

  • Consider the balance of the remaining months until the Initial Period is due to terminate.

  • The Landlord needs to consider the reasonable costs incurred to market the premises once again or re-advertising the premises to secure a new tenant.

  • Is the Landlord able to find another tenant to replace the Tenant within a reasonable time; and

  • Does the Tenant agree that is a fair and reasonable cancellation penalty?

  • If the Landlord or the appointed Agent is able to procure a new tenant and a new lease is concluded  lease during the 20 (Twenty) Business Day notice period for the same duration of the lease or a longer period than the remaining period of this Lease Agreement,  the Tenant will only be liable for:

    • the reasonable advertising costs to advertise the Premises

    • AND for any commission due to the Agent.


Extracts from articles published by Lisa Schmidt (Associate) & Ayanda David Katjitae (Associate) Schindlers Attorneys, Chantelle Gladwin-Wood & Nicole Rens, SSLR Attorneys, and Marlon Shevelew.

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Sherry Moldenhauer
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