What Day of the Month should Rent be Due?
When a landlord is renting out his property, one of the critical decisions he has to make is about payment of rent. However, every landlord should consult on the provisions of rent payment as stipulated in the state laws. This way, the landlord will identify what the law provides and what he has freedom to determine.
Rent due date
Rent due date is the date that a client is supposed to pay for the month’s rent. If the client fails to pay rent on or before the due date, he will be exposed to either payment of fines, or if he is unable to pay, he will be issued with a notice to vacate.
In many states, rent is due the date the lease agreement was signed, which is usually the first day of the month. If the agreement was signed on 1st, then the tenant must pay the rent on or before 1st of each month.
There is always a misconception with tenants who believe that rent is due up to 5th or even 10th of each month, thinking that this provided in the legal grace period. However, this isn’t true- rent is due the date the contract was signed.
Usually, rent is due the first day of each month
Most leases agreement have first of each month as the due date of rent. Additionally, most leases require the tenant to pay their rent monthly, in advance, before or on the first day of the month. They also provide on where and how rent should be paid.
However, despite the law requiring rent to be due on first of each month, landlords are legally free to decide other monthly dates on when rent should be paid. This leaves the landlord with three options to decide on when rent will be due.
a) first of the month
b) in between or
c) the last day
Whichever the date the landlord chooses, it has its pros.
Pros of having the due date at first of the month
a) It is more convenient to collect and keep records of rent payment, minimizing the confusion especially if there are many tenants.
b) It works well for those tenants who are employees of the government, who receive their paycheck from 25th to 30th of each month
c) It reduces the chances of a tenant staying in your premises and later leaving without informing you, especially if there was no security deposit.
d) The regular payments set a good payment policy, instead of having variable dates of paying rent.
e) The landlord has time to concentrate on other issues after the first few days of the month.
f) When rent is due the first day, rent remains a priority to many tenants before other needs emerge
g) It is the best way to mitigate disputes with tenants who default paying when the month has already progressed.
Pro of having rent due in between the month
As a landlord, you have the freedom to set the due date for rent at mid-month. This method has associated benefits just like the other two dates.
a) It will be a favor to those clients who get their money late. This way the landlord meets the needs of each client. It is not a must to have everybody due date being mid-month- it can just be a selection of few tenants who have forwarded their requests.
b) As a landlord, you will attract clients who are rejected in other places. Mostly, these tenants will be loyal; since they notice the favor they are getting from the landlord.
c) This method of payment will work will with low-income earners, who can make a partial payment at the start of the month and then pay the rest by mid-month.
d) Designing such a program where rent is due date mid-month, may help to reduce disputes from late payments, which is one of the main challenges landlords face.
Pros of having due date towards end month
Having the due date towards end month may be risky as it can result in a situation where tenants are not paying the rent in advance anymore. However, there are still some few pros
a) Will favor low-income earners, as they can make partial payments in between the month and make the final payment towards end month.
b) After many people know of this policy, the property demand may go up.
Sometimes as a landlord you may have a vacant property. At the middle of the month, a tenant approaches you and he is ready to get in at the middle of the month. As a landlord you will have the following choices
· Allow the tenancy to move in or
· Instruct them to wait till end month.
However, the second option should not be considered, as there is a better way of treating such occupancy- prorating rent.
What is prorating rent?
Prorating of rent is done so that the rent payment dates complies with the agreement, which stipulates that rent is due on the first day of the month. To prorate rent, do the following
a) If the tenant is getting in towards ends of the month, demand full month’s rent (for the following month” and the rent due for the prorated part of the current month. For example, if a tenant is getting in on 25th, then calculate the rent for the remaining 6 days. Then demand, full rent for the next month.
b) For the second option, consider a tenant is getting in on 10th of the current month. You will demand from the tenant, full month’s rent and then at the start of the month collect the balance due for the prorated rent. For example, if a tenant moves in on 10th May, demand full rent which will be up to 10th June. Then on 1st June, collect rent for June 10th to 30th June.
The benefit of prorating rent is to bring the payment backs at the start of the month after the second month.
Other concerns on when rent is due, is when the due date is a public holiday or on Sunday.