California ADU Lease vs. Month-to-Month Agreement: What Owners Should Consider

The choice changes the tenancy structure

A fixed-term lease generally establishes a defined term, while a month-to-month agreement creates a periodic tenancy that continues until lawfully changed or terminated. Neither format automatically avoids California tenant protections.

Choose based on the intended relationship rather than assuming month-to-month means the owner can change every term whenever desired.

Fixed terms can provide predictability

A fixed term can give both sides clearer expectations about duration and agreed rent during that term, subject to the agreement and applicable law.

The agreement still needs appropriate California and local disclosures and should clearly address utilities, access, parking, occupants and other material ADU-specific arrangements.

Month-to-month offers flexibility but still requires compliance

Periodic tenancies can make future changes or termination structurally different from a fixed term, but advance notice, just-cause rules, rent limits and local protections may apply.

Do not treat month-to-month as a way around tenant protections.

Document shared-property expectations

An ADU may share a driveway, yard, utility service, trash area or other property features with the primary dwelling. Put material agreed responsibilities in the appropriate agreement or addendum rather than relying on an informal conversation.