As a landlord, you may find yourself needing to charge prorated rent at some point in your career. In fact, according to the National Multi Housing Council, nearly 60% of landlords have had tenants request partial payments or late payment schedules due to financial hardship. Knowing how and when to charge prorated rent can be a difficult task for landlords who are new to the business or unfamiliar with this type of rental agreement. This article will provide a step-by-step guide for landlords on how to charge prorated rent, including an explanation of what it is and why it should be charged, legal obligations when charging prorated rent, how to calculate the amount due, setting up payment plans for tenants who can’t pay in full, tips for collecting late payments on time, common mistakes landlords make when charging prorated rent, and helpful resources for further reading.
1. What is Prorated Rent and Why Charge it?
Proration of rent, also known as prorated rent, refers to the process of dividing a tenant’s rent into separate payments based on the length of time they lived in the rental unit. This allows landlords to charge tenants for only the portion of rent they are responsible for. This can occur when a tenant moves in or out part way through the month, or if their rent amount changes due to an increase or decrease in their income. By charging prorated rent, landlords can ensure they get paid for the rental days they provided.
2. The Landlord’s Legal Obligations to Charge Prorated Rent
Under the law, a landlord is required to charge prorate rent if a tenant moves in or out of their rental unit mid-month. In addition, landlords are obligated to apply any rent increases or decreases on the date specified in the lease agreement and must prorate the tenant’s rent accordingly.
3. How to Calculate the Amount of Prorated Rent Due
To calculate the amount of prorated rent due, landlords must first determine the total number of days in a month and then divide it by 30 (or 31 if it’s February). The resulting fraction is then multiplied by the tenant’s monthly rent amount. For example, if a tenant moves in on the 13th of a 30-day month and their rent is $1,000 per month, the prorated amount would be ($1,000 x 13/30) = $433.
4. Setting Up a Payment Plan for Tenants Who Can’t Pay in Full
If a tenant is unable to pay the full amount of prorated rent due, landlords can offer them an installment payment plan. This should be done in writing and should include details such as the total amount due, the number of payments and their due dates, and any late fees or interest that may be charged if payments are not made on time.
5. Tips for Collecting Late Payments on Time
Collecting late payments can be an ongoing challenge for landlords. To make sure tenants pay on time, landlords should clearly communicate payment due dates in the rental agreement and send reminder notices to tenants before their rent is due. In addition, landlords should be prepared to enforce any late fees or interest charges that they have specified in their rental agreement.
6. Common Mistakes Landlords Make When Charging Prorated Rent
When charging prorated rent, landlords should take care to avoid certain common mistakes. One such mistake is not using a standard formula for calculating the amount due. This can lead to inconsistencies and may leave a landlord short-changed if the tenant disagrees with their calculations. Another mistake is not clearly communicating payment deadlines and late fees to tenants in the rental agreement. This can result in tenants being unaware of these requirements and may delay or reduce payments from tenants who are already having trouble paying in full.
Conclusion
Prorated rent is an important part of being a landlord and one that should not be taken lightly. Landlords must understand their legal obligations when charging prorated rent, calculate the amount due accurately, and set up payment plans when necessary. By familiarizing themselves with the resources available and following the steps outlined in this article, landlords can ensure they are providing tenants with a fair rental experience while staying on the right side of the law.
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