This is the second post in a series on prorated rent. Read about how prorated rent affects landlords here.
You’ve decided to move to the next city over. According to your lease, you’re expected to pay $1000 for rent on the 1st of every month. You move in on the 15th of December. You happily sign the lease, you unpack your belongings and you move in. However, immediately, your landlord comes by for their security deposit and a full month’s rent. You say to yourself (and maybe the landlord): “Wait, hold on, I’m not supposed to pay until the first! I haven’t even lived here for a day! Is this allowed? Is this legal?”
Your landlord says that is.
You ask yourself: What should have been done? What would be the easiest way to solve or explain this issue? What should my landlord have done instead? What is this even called? The answer is simple:
What is prorated rent?
Prorated rent is a partial collection of rent, calculated from the daily cost of living the home.
Let’s first briefly imagine a world in which rent and utilities for the month costs $30. There just so happens to be 30 days in a fiscal month, too. We can easily see that the daily cost to live in the home would then be just $1.
Therefore, if you moved in on the 10th of a month, you’re expected to pay the other two thirds, or in this case, $20 of rent. Or, maybe you move in on the 20th of a month? You’d only be expected to pay for the 10 days you’d actually be living there, or a simple $10. The 15th? $15.
Use this simple formula to find your values:
Daily Rent Amount: Monthly Rent / Number of Days in Month (assume 30)
Prorated Rent Amount: Daily Rent Amount x Number of Days Lived in Property
Why is rent prorated?
A prorated rent will occur usually when you move in on a date other than the 1st of the month. In these cases, the previous tenant has just left (or, in your case, you’ve just moved in), and the landlord wants to keep a steady flow of income pouring in. Rather than waiting for the top of next month to put someone in, by prorating a rent, they can easily and quickly get a new tenant in and collect their rent for the month.
But, in the case of your landlord? Most mortgages are paid on the first of each month. By having a tenant in the house (and therefore, money in the bank), the landlord lowers the risk of financial burden on themselves.
Be warned, however, that there is not often a legal or necessary obligation on the landlord’s part to offer a prorated rent. Most do it to collect their money on a schedule.
When is prorated rent collected?
Usually, a landlord will collect the rent on the day you sign the lease, so have your money ready.
Additionally, it’s a common practice to collect the security deposit and a full month’s rent on the same day, regardless of date, and then apply the proration to the next month. Given the fact that many security deposits are a month’s worth of rent, collecting a full rent alongside the deposit is is a good check for landlords to see if their tenant is financially able to provide payments.
If a tenant is able to provide the prorated rent and security deposit without much fuss, the more likely they have steady income they can rely on. In the event they can’t provide both payments, it may bring their financial stability into question.
When your security deposit and prorated rent are asked for, however, make sure you get receipts. Security deposits and rent, by law, have to be handled differently, so be sure to make out two different payments—one for the deposit and one for the rent.
How to get prorated rent
It depends on your landlord and your lease.
Oftentimes, your landlord will offer you the prorated rent as an extension of good faith. Other times, it will be stipulated in your lease the scenarios in which a prorated rent might occur. It’s even possible that you might have to ask for a prorated rent.
If the latter is the scenario you’re facing, always make sure you work on it and ask for it in writing. As with all things financial related, it’s good practice to keep a running list of receipts and reports. Keep this request with your other financial documents.
The Quick and Easy
- Prorated rent is a partial collection of rent.
- It’s usually collected during the signing of the lease, but may be collected the following month after paying a full month's rent and security deposit.
- It’s calculated based on how many days you’ve spent in the property.
Still seem troublesome?
Tellus provides a free, fast and one-touch service for calculating, paying and managing monthly rent, which comes equipped to handle prorated rent from the outset. Try it out, or look for us on the App Store or Play Store!