Sorry if this question has been asked before. I searched and didn't find any matching topics. My wife and I are acquiring my first rental property in a week and we'll be inheriting two tenants. According to the current lease, both tenants are to pay their rent on the 1st of each month. It's currently February and both tenants have already paid their rent. But we are taking possession of the house this week and we will not receive rent this month since it has already been paid to the current seller.
How is this situation typically handled? Does the seller get to keep rent for the entire month even when he no longer owns the house, or should he transfer the prorated rent to us during / before closing?
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
4y
@David He This is handled at closing between the lawyers. If they collected the rent you will be prorated for the amount of days in the month you will own the property. Since the leases pass on to you as the new owner, so do the payments that come with those leases. Ask your lawyer or agent, they can clear this up for you very quickly.
The only caveat is lets say the closing is on 1/5 and your state doesn't consider rent late until the 10th like Connecticut does. If the landlord hasn't collected the rent yet you want to get word to the tenants to pay you and not the seller.
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
4y
yes he "should" transfer the pro-rated rent but it is something you will need to stay on top of. I mean, its negotiable like anything else but thats common. Make sure its on the hud
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
4y
@David He This is handled at closing between the lawyers. If they collected the rent you will be prorated for the amount of days in the month you will own the property. Since the leases pass on to you as the new owner, so do the payments that come with those leases. Ask your lawyer or agent, they can clear this up for you very quickly.
The only caveat is lets say the closing is on 1/5 and your state doesn't consider rent late until the 10th like Connecticut does. If the landlord hasn't collected the rent yet you want to get word to the tenants to pay you and not the seller.
@David He, Congrats on your property, I am sure you are going through an Escrow, in my experiance, if you donot have Lawyer, the Escrow company generally takes care of it, and yes prorated rent AND the security deposit and any additional payments due towards maintainance(taxes, any bills etc) will also have to be accouned into final setalment.