Rental Management keeping year lease payment

[Michael Hansen]

I have a SFR in Cullman, AL. The new tenant paid a year's lease. My rental property management company is keeping this cash and disbursing the rent in monthly checks. Is this normal?

[Adam Martin]

I'm not sure but I think it is probably a good idea on their part.  The pre-paid rent still technically belongs to the tenant and if they break the lease you are going to have to try to re-rent and then give them back their money for the months you had it re-rented minus your expenses.  They don't know you well enough to know if you will be able to give the refund so they are most likely holding it in escrow to ensure the money doesn't get spent and then all of a sudden they leave and there is no money to pay them back with a costly legal bill I'm sure.  Pre paid rent isn't as big of a benefit as people like to believe and hopefully they didn't accept a less than qualified tenant as that is who typically is offering it.