Handling last month rent, how to charge the difference?

Question

My tenants have lived in the house for several years. During this time, the rent has increased by $650. How do you handle the difference between the original last month's rent and the current rent? Do you require tenants to add the difference to the last month's payment each year with a rent increase? Is this stated in the lease agreement?

James Mc Ree · Answer

The outcome probably depends on the wording of your lease and any related paperwork.

Example: Thank you tenant for your $X payment for your first and last months of the lease.

If the lease is otherwise silent regarding the last month, the tenant bought a month of tenancy regardless of future pricing. This is the problem with taking payment for the last month when a lease can extend indefinitely.

This arrangement is illegal in PA due to a court decision 10+ years ago. The court found Landlord was holding 2 months of security when the law only allowed 1 month after the first year. The last month's rent was considered undefined since there was no last month in the lease. The way to get around this is to end the lease at 12 months, then start a new 12 month lease.

This is a PA court decision. Your state may be different.

Bill B. · Answer

Are you sure that checks still good? I’m not sure a check from “several years ago” is still good.

I would bring it up now. Tell them because the check is old and the amounts don’t match you’d like to return that check to them when you receive a new check for the correct amount.

Ps. If by “the check is still with me.” You meant you deposited it. (I don’t collect last month’s rent but if I did I would have noted in the lease I was going to deposit it.) Then yes. Simply state they owe current rent minus prepaid rent amount.

Charles Carillo · Answer

When a tenant hands me or anyone on our team a check, we deposit it within hours. Did you tell them that they have not paid the month in full? What did they say?

Linda Roberts · Answer

Yes they signed a new lease, but last month check is still with me from the 1st year and in August they will use this last month check. I want to prorate it to the current rent and ask them to pay the difference. Is it a normal practice?

Charles Carillo · Answer

@Linda Roberts

Did they sign a lease agreement for the new lease rate? When we raise rates in our apartments, the tenants sign a new lease.

Handling last month rent, how to charge the difference?

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