BiggerPockets

Just wondering what everyone's opinion on this is. I have a mom and daughter who usually pay rent 6 months in advance, due to the fact they cannot control their spending. Well they called this morning and they have had car trouble and would like Jan's rent back. Of course I told them I would do it, but I can really see a real downside to this also by allowing them to do it. I have no idea what the laws are in regards to something like this since we have a month to month lease.

Any opinions?

do you give them a discounted rate if they pre-pay? if so, then i would charge full rate.

if you don't then i agree, it's the right thing to do.

No there is no discount for prepaid rents. I agree with you guys. I have a bad feeling about this. Some how I have to make it very clear that, that this is the only time I will grant this request or I will not accept rent in advance again. I do not want to become a bank, unless I can figure out how to make money off it, and the little bit of interest I get certainly doesn't even make up for my time and gas to drive over to give them Jan's rent back. I have very mixed feelings about this whole situtation.

MIke, You just give it back, correct or are you saying that it's now implied that now these folks are now on a 6 months lease?

Not a bad idea Eddie, but what stops them from pulling the money out when they feel the need?

MIke, You just give it back, correct or are you saying that it's now implied that now these folks are now on a 6 months lease?

I am not a lawyer, but I am in court more than many lawyers (just kidding). I confess that I don't know the case law on this issue in Ohio. However, generally once the tenant has given you rent and you've accepted it, you're on the hook. You can't simply give it back. What if they refuse to accept it? It's just my opinion, but I don't think you could win this in court. Would a magistrate really kick out a tenant once you've accepted their rent? It would never happen here!

Mike

They've been good tenants for 2 years, been on this advanced rent arrangement the whole time and only now are asking for a one time car repair, one month of six prepaid months to be returned? Is that right? Is the prepaid arrangement part of the written lease?

I think the rent refund is a dangerous precedent, and as described, likely the beginning of the end. You may also run into problems in court, if it comes to that, of not offering this type of arrangement to other tenants as part of your normal course of business. Equal housing laws really dislike special treatement for any single tenant.

I'd take a page from Nancy Reagan, "Just say no." Too late for the agreement, but, if they asked you to repair their damage with the security deposit they have with you, would you agree to that? Technically, if you have this arrangement written into the lease agreement, doesn't your acceptance of this returning the prepaid rent put them in violation of the agreement, and your voluntary acceptance of this void that clause all together? Not something I'd want to test in court.

At the same time, a good tenant of two years is worth keeping, for sure, but I'd find another way. Realizing that the need for the money stems from car trouble, I'm going to guess the car is paid for (bad credit means no loan), and that the repairs don't really equal 1 months rent. Perhaps suggest they pawn the title for a couple months, and if the loan shark rates are too much, consider a non-landlord solution where you personally loan them the money, have them sign a promisory note for a nominal interest rate, and they sign and you hold the title. Make sure you pay the repair shop directly, and not pay them. Make the whole thing business like and separate from the LL/Tenant relationship. If you have to be the bank here, don't mess with the rent, be a secured private lender. Then, you'll keep the lease clauses in place and paid, hopefully gain a little goodwill with the tenant and it'll be another two years of no vacancy and good tenants before they approach you again (and they will).

Good luck, and let us know how it goes.

OK. My response was concerned with the lease/rental agreement and the abandoning of any prepay clauses. If it is not supported by the lease, then I agree that giving it back is the right thing to do. You have no standing to keep it.

Eddie, I couldn't agree more. I pride myself on treating my tenants like customers. I have from day one and thats how I run this company. Word of mouth spreads very quickly in my little city and I never have problems finding good quality tenants due to my reputation. I would not have been able to say no for $600 to these ladies even if I did have a legal standing, they are good people.

You all brought up very good points to consider in the future and I made it very clear to them tonight, that this would be the only time that I would permit this.

Thanks