Advanced Rent Payment

[Patrick Liska]

If a tenant pays rent in advance, equal to a few months, does your PM have the right to keep the advanced payment and distribute to the owner the amount due each month. In essence the PM is keeping the money in their account collecting interest and then each month taking out what is due to the owner and distributing it. if it's not spelled out in the management agreement, can they legally keep that money in their account ?

[Tracy Streich]

The PM is correct.  They have to keep the advance payment in escrow.  It is the tenants money until the time time the rent formthat month is due.   They do this to protect the tenant and you the owner.  For example a natural disaster hits like a hurricane.   It hits the house and the home is now in a condition that it can be lived in.   If they paid 6 months in advance and the PM gave you that money now what.   Did you spend it?   You may not have cash on hand to pay the tenant back.   In regards to the interest.  The PM could care in the least about 0.20% of $1000 over two months.  

We always take rent in advance if offered.   Our goal is to rent and collect.   Anytime we can collect in advance we do it.  Figuring that out is way better than getting excuses in partial payments and late rent