I agree with you that's messed up but not illegal.
"Can I keep paying rent and just move out asap?" Yes & no. You need to move out sooner rather than later you cannot just continue on a month to month against the landlord wishes.
"Is there some legal action she could take if we do not sign this lease by the 1st like she wants?" Yes she can give you a 30 day notice to vacate.
You need to sign the lease or move with in 30 days - those are your options.
You are on a month to month rental agreement currently. If you do not sign the lease, your month to month agreement will continue. However, your LL can raise your rent or change any of the terms with just 30 days written notice.
Your choice then is to pay the new rent or accept the new terms by continuing to stay, or give your notice and move.
Also, either party can end the agreement with just 30 days written notice, no reason is required.
You never signed a lease when you moved in? That's your mistake.
I would start looking for a home and give notice to the landlord of your intended move out date. Inform the landlord that, since the lease provided is contradictory to the verbal agreement, it is not valid. As such, you are considered a month to month tenant.
Since you do not have a current lease, you are considered a month to month tenant. As such, either you or the landlord can give a 30 day notice to vacate. She can not force you to sign the lease, but she can demand that you vacate if you don't.
Here- IF you never signed original lease that you never got, then your golden and on a month to month lease, take lease from her, tell her you need to review before signing or review with your wife,whatever works, continue to do what you gotta do rent or find new place or get your loan for new house,avoid her like the plague and not signing new lease by avoiding her,hopefully you can avoid her like 8 months or whatever it takes to get new place weather you rent or buy,lock that up,give her 30 day notice when you get new place figured out, and 1,2,3, your done!! After your 30 day notice
Generally, your original verbal agreement stands. If you try to vacate early, she can say that you are breaking the lease. If she tries to get you out early, you can say that she is breaking the lease.
You need to create a professional letter stating that your original verbal agreement will end on December 31st (or whenever) and that you plan to move out by that date. Tell her that if she wishes you to vacate sooner, and there will be no penalty, you are open to discussion. Tell her, nicely, that you are not interested in renewing your lease at this time. You may want to include that if she wishes to draw up a month to month rental agreement, you will review it.
Find your new house now to close as soon as you can. Wait two weeks and write back to land lord snail mail saying the lease she sent had the wrong date on it and should end Dec 31 since you moved in in January. It will take her a week to get back to you. If she does not agree to your date she may give you notice but probably can't until Oct 1 since she didn't by Sept 3 so you have to Nov 1 to leave, your new house might close by then. Since it took her 8 months to do paperwork this time she is slow so may take 4 months to decide how to react to your not liking the lease.
They are never obligated to provide a lease. If you don't like the lease she is offering, by all means don't sign it. She can in turn give you a 30 day notice to vacate. YOU are obligated to give appropriate notice (30 days) to vacate (and a notice given now STARTS 9/1). She can raise the rent with notice, she can create any rule she wants with notice.
I know the law where I live - but unless you tell us which state or country you live in I can't tell you what the law is where you live.
I moved into an apartment about 8 months ago. At the time we were given the key, we asked the landlord about the lease and she said she was drawing one up for a * 1 year Lease *. ok, that's cool. 8 months later, still no lease. We got a letter in the mail LAST WEEK, (THE YEAR LEASE). Now; in 4-5 months, our original plan for a year lease would be up. the rent is pretty high and we would be better off buying a house and paying mortgage. That is what we are planning right now. She says in the lease it is starting the beginning of next month and ends in a year...not cool. Our original "year lease" will be up soon so I DO NOT want to sign this legally binding contract with all of these rules in it that we were not told with the original verbal agreement. Can I keep paying rent and just move out asap? Is there some legal action she could take if we do not sign this lease by the 1st like she wants? We are not by any means scumbag tenants. We keep it clean, haven't had any issues, we haven't even seen or talked to her more than 3 times throughout these entire 8 months! And now she wants to change the rules in the middle of the game...I think its BS but I need some advice. PLEASE HELP!