How Correctly to Prorate Rent on a Lease Renewal

Question

One of our single-family-home tenants is renewing her lease. The new lease will take effect on October 23, and the new rent is higher. So her total rent payments for October will be 22 days under the old rent and 9 days under the new rent.

My question: Is there a legal requirement to prorate by assuming a 30-day month? Since October actually has 31 days, calculating the per-day rent by dividing by 30 actually increases the total rent the tenant would have to pay. Calculating the more accurate rent by dividing the monthly rent by 31 actually gives the tenant less rent to pay, but I want to do it legally. And if it makes a difference, the property is in California.

Any insight would be appreciated.

Josh C. · Answer

You guys know this is more of a people business than a spreadsheet business right. We use Propertyware and it does the same and we do prorate when they move in, but renewals we don't. just credit the account. We, and our owners, aren't worried about $15, but tenants really do feel like we are greedy fat cats when you do that crap. At least in Indianapolis tenants care about their $15, and good will is worth a lot more than that IMO.

Michael Lucero · Answer

Just keep it simple and do 22 at old and 9 days at the new rate and give the tenant a total amount owed and tell them the calculation.

Jim Adrian · Answer

@Alan Roebuck

You should building into your lease how to establish pro-rated.

"The daily pro-rated amount will be calculated by dividing the rent amount by thirty (30) days and then rounding the cents up to the next dollar amount. "

This leave 6 months with an extra when you adjust for Feb to 30 days non-leap year.

Alan Roebuck · Answer

Thank you all for your replies. I had thought that there might have been one industry-standard method that I had not known about, but your suggestions all make sense.

Matt W., I particularly like the method you mentioned. That some judges use it adds particular weight.

Thomas S. · Answer

Change the lease date to the first of the month. Add the additional days to her present rent (prorate) for the remainder of the month of October.

Kim Meredith Hampton · Answer

Alan,

We have always used the actual number of days in the month, but my leases always end at the end of a month, so I don't have everyone's lease dates all over the place, makes it much cleaner and easier to remember

How Correctly to Prorate Rent on a Lease Renewal

How Correctly to Prorate Rent on a Lease Renewal

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