Can you withhold refunds on prepaid rent?
Hi all,
I have a tenant who is by most accounts pretty good. He is on a month to month lease, single parent working two jobs which I really respect. He has been late on rent one time which we worked through.
When he received his income tax refund he wanted to be extra responsible so he pre-paid rent until October. Sounded great to me aside from a little extra accounting.
However, twice since then he has run into "unexpected" circumstances, for example a car repair. He asked for a partial refund of October earlier and the rest of October over this weekend to cover the latest emergency.
I've done a little Googling and it seems that since it's prepaid and I can't book the revenue until the month rent is due it needs to be sitting in the separate account I use for security deposits, which is fine. My question is, is it his money until that point?
I have no desire to act as a free bank for tenants but I get the sense that I can't just say "no" to refunding prepaid rent. There is no language about it in my lease.
Just curious what people's experience might be on this kind of issue. I don't want to open my mouth and say something that is legally in the wrong or a gray area.
I've currently got two properties and am closing on my third this month, so I'm definitely still learning that balance between being a nice guy and not creating a situation where there are loopholes people can take advantage of.
Thanks for any feedback!