Amending rent due from 12th to 1st of month in middle of contract
I currently have my rent due on the 12th of each month. Mortgage is due on the first. I now know it is better to have that date be the 1st of each month.
2- What is the best way to go about doing this without losing out on money? Or is a refund of those 11 days and amending to the 1st the only way to go about it? This is a 2 year contract and thinking of amending it at the end of this month which is the end of the first year.
Or, is keeping it the 12th of each month for the rest of the year best?
Thank you!
You can change the lease terms via an amendment that both the landlord and the tenant would sign. Whether or not the tenant would be agreeable to that is a different question.
A better answer however is that you really need to build some reserves. If you are relying on this month’s rent to pay this month’s mortgage, your first vacancy (or a major repair) will put you in mortgage default/foreclosure proceedings.
Quote from @Sergey A. Petrov:
You can change the lease terms via an amendment that both the landlord and the tenant would sign. Whether or not the tenant would be agreeable to that is a different question.
A better answer however is that you really need to build some reserves. If you are relying on this month’s rent to pay this month’s mortgage, your first vacancy (or a major repair) will put you in mortgage default/foreclosure proceedings.
Thank you for your reply! They have agreed to change from the 12th to the 1st. I have an emergency fund (reserves) for the property in place. I suppose I am seeking the best possible way to go about amending without losing out on the money from 11 days of the amendment.This would be the same if they renewed lease and I wanted to change to the 1st for new contract, correct? Or, will I be biting the 11 day bullet either way?
There is no biting the bullet. You are not changing the rent amount, you are simply saying X dollars was previously due on the 12th, now that same X dollars is due on the 1st.
Quote from @Sergey A. Petrov:There would be no prorate or refund needed for amending from the 12th to the first? Could you explain? Thank you for the help.
There is no biting the bullet. You are not changing the rent amount, you are simply saying X dollars was previously due on the 12th, now that same X dollars is due on the 1st.
I don’t understand what you are prorating. Doesn’t your lease say *monthly* rent of X dollars is due on Y date? The only thing you are changing is the Y date. Or does it say rent of X dollars for June 12 through July 12 is due on June 12?? That would be a rare find in any standard lease forms. The proration usually happens during the first month of the lease and the rest is monthly rent.
Outside of the above, the only reason you’d even consider any kind of a refund is if your tenants moves out for 11 days, gave you the property back, and then moved back in on day 12. That would be an even weirder situation in the world of renting real estate.
Quote from @Sergey A. Petrov:
I don’t understand what you are prorating. Doesn’t your lease say *monthly* rent of X dollars is due on Y date? The only thing you are changing is the Y date. Or does it say rent of X dollars for June 12 through July 12 is due on June 12?? That would be a rare find in any standard lease forms. The proration usually happens during the first month of the lease and the rest is monthly rent.
Outside of the above, the only reason you’d even consider any kind of a refund is if your tenants moves out for 11 days, gave you the property back, and then moved back in on day 12. That would be an even weirder situation in the world of renting real estate.
Correct. Month to month contract. Tenants were requesting prorate or refund and my initial thought was no. This all makes sense. I wanted to reach out for guidance to clarify. Thank you greatly for the help!
@Nick Gagel
So currently they paid rent July 12 through August 11, correct? So you could either just have them pay on august 12, a prorated amount that would cover rent through the 31st of August. Then they pay for full month of sept on Sept 1st.
Or a more complicated option is they would pay on august 12 to cover rent through sept 11 like usual, but pay rent again on September 1st but it would be prorated, and the prorated amount due would be for sept 12 through the 30th. Then they would start the next rent payment on October 1 for the full month. But I think the 1st option is easier and less confusing. :)
If it’s hard for them intially, you could just split the payments up for September, have them pay 1/2 if the rent on sept 1st and the remainder on Sept 16th. Then from October 1st make it for the full month.
@Nick Gagel have them pay pro-rated rented on the 1st of the month to cover the 12th to the 30th. The last payment already covered up until the 12th. Going forward have them pay a full months rent on the 1st.
Alternately ask them to pay on the 12th for the 12th to the 30th and a full months rent for the next month on the first.
In both situations they are paying the same rate per month. In order to come up with the pro-rata (daily rate) divide the monthly rent by 30.
In your lease you specify rent is now due on the first with pro-rata rates for dates x to y.
I'm curious as to how the rent due date became the 12th in the first place? That's pretty unusual.
#3 Innovative Strategies Contributor
- Investor
- Greenville, SC
Quote from @John Teachout:
I'm curious as to how the rent due date became the 12th in the first place? That's pretty unusual.
I bought a 30 unit apartment community and the prior owner had a different due date for most every unit. The due date was based on the lease signing date. So inefficient.
We transitioned everyone to the 1st by having them pay prorated rent through the end of the month on their original due date (rather than a full month).
#3 Managing Your Property Contributor
If you started the lease with it due on the 12th either keep it or have them pay 18 (or 19 days) for the balance of the month and then start with the full rent on the 1st. I'd leave it as depending on how you look at it, the rent comes in 12 days after the mortgage payments due (cup is half empty) or 18-19 days before it is due (cup is hall full). this also gives you a bit of a buffer if they are a day or two late and you have no reserves, so rely on the rent to cover the mortgage.
Tenant has already paid through August 10th. On August 11th they should pay for August 11 - 31, covering until the end of the month. On September 1st they pay a full month of rent and they're on track.
Get the agreement in writing, signed by both parties.
@Nick Gagel, keeping the terms of the lease as is will lessen the chance of losing your tenant. Hopefully you have the money to float the mortgage for 11 days. I would suggest, don't rock the boat.
Quote from @Matt Bishop:
@Nick Gagel, keeping the terms of the lease as is will lessen the chance of losing your tenant. Hopefully you have the money to float the mortgage for 11 days. I would suggest, don't rock the boat.
Great thought. Thank you!
Quote from @John Teachout:
I'm curious as to how the rent due date became the 12th in the first place? That's pretty unusual.
Just poor contract language and organization for first rental property. Aligning the move in date with the rent due date. First year was paid in full so it wasn't an issue to begin. Now that the second year is beginning, It has come to my attention.