What is the proper way to structure a lease agreement to handle prorated rent? If I have someone moving in on 9/23, should I make the lease commencement date 9/23/16 through 9/30/17 (slightly more than 12 months) and just prorate the rent? Or is it best to structure the lease precisely at 12 months and add a proration clause. I am thinking the former since the terms of the lease should apply on the move-in date. But just didn't know if there was some taboo on lease terms being slightly more/less than a standard 6/12/24 month arrangement.
Hi Tony - If it is standard in your market is for leases to begin/end at the beginning and end of a month then do it the way you initially thought. You will have the best chance at a quick turnover if you do it that way (more likely someone will want to move in on the 1st than the 24th. In my market, people move on any given day of the month so when I have a situation like this, I typically have the lease end on a Friday night so new tenants have the weekend to move in. I always run it by the prospective tenant first. Good luck.
To make it easier for me since all my rents are due on the 1st, I will make the lease 9/23 through 9/30/17. Then my lease would state that I will collect full month rent when tenants receive the keys. Then on Oct 1st, i will collect 1 week rent.
Write your lease to begin on the first of the month, create a separate invoice for the additional days. Makes 30 day notice (or eviction) easier moving out too. Good luck.
Too late for me this time - but at what point do you prorate rent? My tenants asked to move in the 8/28 for a September 1st lease start (so they could move on a Sunday), and since it was empty, I just turned the keys over early. Any potential pitfalls in doing that?
Not really. If a place is vacant and we are 3 days or less from going in, and it's ready (i.e. cleaned, etc), I give them the couple days especially if it's on a weekend. 4-7 days, I tell them it still needs to be cleaned and reviewed, and anything more is a pro-rate.
Thanks everyone for your responses. Account Closed I believe what is important about 30-days notice is the end date (not the start date). So that shouldn't be a problem then if I set it up for 9/30/17. What I want to protect myself from is setting the start date to 10/1 but having them move in on 9/23 and having 7 days where they are basically living in my property under the terms of a contract that technically don't start until 10/1.
I am inclined to start the lease 9/23/16 (so that all terms apply on that effective date), prorate the rent for the 7 days, and collect the proration + 1st months rent upon lease signing. End date will be 9/30/17 (slightly longer than 12 months). Does anyone see any problems with that?
Agree that it is goodwill to allow a few days free at the start of an agreement. Cover yourself with a clause like this:
For the period from Tenant's move-in date, enter date through the end of the month, prorated rent will not be collected. All provisions and rules of the agreement are in effect when the Tenant moves in.
If it is more than a few days, collect prorated rent or discounted rent. A clause like this can be used:
Prorated first month's rent. For the period from Tenant's move-in date, enter date through the end of the month, prorated rent will be enter amount.