Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Tenancy at Will

What it is:

Tenancy at will is a legal term describing an arrangement whereby a tenant occupies a piece of property with the permission of the property owner.

How it works (Example):

Let's say John Doe is a bachelor trying to make it in Hollywood. He meets Bob Smith, who is a celebrity with a big house. Mr. Smith has a guesthouse that he's willing to let John Doe stay in for "a while." John Doe is a tenant at will, meaning he's there for as long as Mr. Smith lets him stay -- there is no definite rental period or even a regular rent schedule.

If either party wants to change the deal, they can do so, though giving reasonable notice is usually warranted. Though our example is with unrelated parties, tenancy at will commonly occurs among family members.

Tenancy at will usually terminates when the owner of the property dies, the tenant dies or the owner sells the property.

Why it Matters:

Landlords can terminate a tenancy at will anytime, which means that tenants are often better served by having a written lease that sets the expectations for how long the tenant can stay and what the rent payment will be, if any.

The advantage of tenancy at will, however, is that both parties have tremendous flexibility to change the arrangement quickly without breaking a contract.