Renting a property is a life cycle we all tend to experience. Before we move into the apartment, furnish it, and probably chip the walls while sorting the furniture, there is some adult stuff we need to take care of.
And by adult stuff, I don’t mean getting a Costco membership or tracking your bills. I mean the much bigger adult stuff like the LEASE AGREEMENT!
What Is Prorated Rent? (I am so impressed by the simplicity of this clause)
Initially, I thought this might be a complicated lease clause that would require legal assistance to understand. But the simplicity of the prorated rent is so beautifully curated. San Diego has upgraded so much in the past years in making residential living comfortable and accessible through means of ADUs and now prorated rent as well.
Prorated rent is an adjustment to the rent amount based on the number of days the tenant occupies the rental property during the billing period. This period is generally a month.
When does Prorated Rent Apply? (Again, I needed to know this)
Prorated rent could apply in the following scenarios.
- The first scenario could be the Mid-month Move-in.
- The second scenario could be the Mid-month Move-out.
How will I Calculate the Prorated Rent? (Here comes the fun part)
- Determine the daily rent: Divide the monthly rent by the number of days in the month to get the daily rent.
- Check the number of occupied days: Identify the exact number of days the tenant is going to occupy the property within the monthly billing period.
- Multiply daily rent by the number of occupied days: The prorated rent is the result of multiplying the daily rent by the number of occupied days.
Example Calculation
Monthly rent = $1,500
Tenant move-out date = 10th day of a 30-day month
Calculate the daily rent: 1500/30 = 50
Number of occupied days: From 1st to 10th = 10 days
Prorated Rent:
50 x 10 = $500
Prorated Rent Clauses in Lease Agreements (Trust me you MUST read the lease)
These days lease agreements are made simpler to offer security to both the landlord and the tenant. These leases include clauses that specify how prorated rent will be handled.
The clause will include:
- The scenario in which the prorated rent applies.
- The method of calculating the prorated rent.
- Any additional terms or conditions. Both parties should always ensure to review and understand these and all other lease terms before signing.
Tips for Tenants (Go team rental)
1) Review your Lease Agreement
Please review your lease agreement to see how the prorated rent is addressed. Check the clauses that outline the conditions of the prorated rent and how it will be calculated. You don’t want to get a surprise in the middle of the month on the moving-out date only for you to realize that prorated rent was not part of the lease.
And believe me, this has happened with people. Ignorance is now always bliss, it’s money!
2) Communicate with your Landlord
Keeping your landlord in the loop is critical. Clear communication between both parties could help ensure a smooth transition and will allow time to calculate the prorated rent accurately.
3) Request a Written Agreement
The only believable word is the written word. Request your landlord to draft a written agreement detailing the prorated rent and associated terms.
Someone I know decided to move out in the middle of the month. They contacted their landlord, discussed the prorated clause from the lease and the landlord provided a written document of how this would work. It was the simplest moving-out I have ever seen.
4) Document the Condition of the Property
When moving out, document the condition of the property through photos and videos. This will help you from any potential disputes regarding damage claims and ensures that you are only charged for the days of the occupancy.
Tips for Landlords (Go team owner)
1) Include Prorated Rent Clauses in Lease Agreements
Be a smart landlord and do not give your tenants to take you for a ride. Clearly outline the conditions of the prorated rent in the lease agreement. This provides transparency and avoids any disputes with the tenant.
2) Communicate Clearly with Tenants
Stay communicated with the tenant regarding their move-out date and the prorated rent calculation. Draft a written confirmation to secure your interest.
3) Document Everything
Keep detailed records of all communications, agreements, and property condition reports. This documentation can be invaluable in case of disputes or legal issues.
Conclusion
Prorated rent is an ongoing concept in the rental market. I have personal experience with the concept and it has favored well. If rental was as simple as selling or buying a house, prorated rent would not have existed.
Because prorated rent is such a common practice, lease agreements have become much more secure by incorporating this clause. Renters and landlords are now aware of how to use prorated rent to a mutual advantage and that’s how this relationship should be.