The only reason that she is staying is because that is all she can afford. Too bad, it is difficult to increase rent during this difficult period.
Renters in Seattle do have more rights. If you understand the loopholes, you will realize that there is no real difference for the renter between Month to Month and a fixed term lease. So, I think it is actually good for you to go Month to Month. However, every lease must have an expiration date, like 6 months or 12 months. The expiration date is to protect the landlord.
