How to Carry Over Last Month's Rent on a Renewal?

Question

I have a tenant who paid first and last month's rent ($800) when she signed her initial lease. She's scheduled for renewal in June and she has expressed interest in doing so. Rent would be going up to $850. Does her original last month's rent payment...

A) Still apply to this her rent this May (aka the 12th month of her original lease) and she just no longer has a last month's rent deposit?

B) Carry over to the last month of the renewal term (which would now be May 2020)?

If it's B, then how would we go about adjusting her original $800 last month's rent for the new $50 YoY rent increase? Would she just pay the $50 in the final month?

Thomas S. · Answer

The term "last month rent" is self explanatory. The last month rent remains with the landlord until such time as a tenant gives notice to vacate. It will then be applied as intended to their last month rent. Each year as a tenants rent is increased the tenant is required to top up their last month rent deposit to insure it will cover the entire last month rent when they do leave.

Justin Kane · Answer

new lease agreement has new fulfillment and no carry overs can be allowed unless properly documented in the addendum

John Teachout · Answer

In my area, it's not common to collect last month's rent. Just the first month, security deposit and any animal fees. Some states allow almost any amount of deposit or advanced rent and some states don't. Just know your local laws. I don't believe that Florida limits the amount of security deposit you can collect and that's how I would consider "last month's rent". ie, security deposit and last month's rent should be set aside until used.

Scott P. · Answer

As you know, you have to follow the laws that are applicable to your area and whatever your lease says - and I don't know what those say. But I can tell you what I do in this case....I would let her original last month's rent of $800 be her future last month's rent. So if stayed many years and the rent was $1000 per month in the future I'd still let her last month be $800. I admit that under this plan I won't be getting paid the difference between $800 and the current rent in the future when she moves out.I don't fully understand how the deposit relates to the $800 last month's rent? In my area the deposit is a different sum of money than the 1st or last month's rent. The deposit is not the last month's rent. For the record, I don't ask for the deposit to be increased to match the current rent if the current rent is more than the original deposit and the original deposit was equal to one month's rent.I do list the rent and the deposit amount on the first page of the lease. So no one forgets the amounts as time goes by. I would list the last month's rent there also if it was paid in advance but I currently don't get that paid in advance.If you wanted to adjust the original last month's rent and/or the deposit, I would think you could go about it any way that you and her agree on, as long as it doesn't violate law or the lease. It could be topped up but personally I've always excused it.

Colleen F. · Answer

Yes, you can do that or you can ask for the $50. I don't recall asking for the extra $50 but often it doesn't come into play because I am prorating the last days because it is a long term tenant buying a house or moving out of state so maybe they have extended a little or leave a little early and they pay pro-rata for those days. That said if you list it on the front of the lease either way it is clear what they have paid toward last month and if rent goes up significantly you could collect the additional amount. Also check the florida law, I doubt there is relevant info for this but maybe.

Jason L. · Answer

So if I'm understanding you correctly (using my example from the OP, assuming tenant left after next term):Months 1 - 12: Tenant pays $800Months 13 - 23: Tenant pays $850Month 24: Tenant's $800 last month's rent is applied. $50 balance is presumably excusedIs that what you would do?

Colleen F. · Answer

I just carry over last months rent as a line item on the lease front page. So the page would say Deposit x dollars, last month rent x dollars. Monthly rent x dollars. You would collect rent continuously until they leave and that would cover the last month before they leave. Technically you can charge the difference in last month rent the last month before they leave but I haven't as usually it isn't a clean break I am leaving at then end of the month. I can tell you it saves some arguments to have that deposit listed because long term tenants forget the amount is lower.

Samuel Pawlitzki · Answer

Not sure where your tenant lives, but just make sure you comply with the tenant laws. For example, here in CA it's actually not legal to pre-pay rent that is due 12 months from now. (Last Month's rent) Instead, a lot of landlords just demand a higher deposit, or have the tenant pre-pay the first 2 months of the lease.

Samuel Pawlitzki · Answer

Hi Jason, if I understand your question right, she would just not pay rent in May, since she already paid you that rent ahead of time. Then in June, she would have to pay the $850 if she agrees to that.