Prorated Rent

Prorated rent is the amount of rent a landlord charges a tenant when that tenant has only occupied the apartment for period of time less than a full rental period (usually one month). Prorated rent is employed when a landlord only charges a tenant for the number of days that the tenant actually lived in the apartment during that rental period. To explore this concept, consider the following prorated rent definition.

Definition of Prorated Rent

Noun

  1. The amount of rent a landlord charges a tenant, divided proportionately to cover a partial rental period.

Origin

1855-1860        Americanism

What is Prorated Rent

Prorated rent is a rent calculation that is made by a landlord based on the fact that a tenant is occupying the property for less than an entire rental period (usually a month). This occurs when the tenant moves in prior to the first day of the month, and the landlord wishes to bring the rent due date back to the first of each month. Landlords most commonly calculate prorated rent based on the average daily rental amount.

When Rent is Prorated

Most landlords rent their spaces, charging by the month, with the rent being due on the first of each month (though they may designate any other due date). Not all tenants move in or out on the first of the month, however. When a tenant decides to move out early – before the last day of the month – he is generally responsible for the rent through the end of that month (or rental period), unless otherwise agreed to by the landlord.

When a tenant moves in on a date other than the first day of the month (or other rental period), the landlord is left with the choice of either continuing to accept that tenant’s rent payments on that move-in date for the duration of the lease, or to make an adjustment to bring the rent due date back to the first of the month. This is where proration of rent comes into play.

Example of when rent is prorated:

Sandra moves into her new apartment on July 17th. The landlord has designated that rent for all of the apartments is due on the 1st of each month. In order to bring Sandra’s due date to the 1st of the month, 14 days must be made up (the 17th through the 31st). The landlord will prorate the rent, calculating the daily rate based on the monthly rate, and multiply that by 14 days.

While landlords are free to apply this however they choose, most landlords charge tenants a full month’s rent the first month, then allow the tenant to pay the prorated amount the second month. This gives the landlord more confidence that the tenant actually has the money for the full rent, and protects against a tenant moving in for a very small amount, then either leaving, or defaulting on their lease.

How to Calculate Prorated Rent

When rent is prorated, It may be confusing as to how to calculate prorated rent, but it is actually not all that complicated. Essentially, prorated rent is calculated by dividing the monthly rent payment by the average number of days in a month, which is 30.42. This takes into account the changing number of days in each month, and is derived by dividing the total number of days in a year (365) by the total number of months in a year (12). The resulting number is the average number of days in each month, which is used to divide the total monthly rental amount – to obtain the daily rental amount.

This is then multiplied by the number of days in the partial rental period to obtain the amount of the prorated rent that the tenant is charged.

SAMPLE PRORATED RENT CALCULATION
Monthly rent amount ($1,000 in this example)

$1,000

Divided by average days in a month

30.42

Equals daily rent amount

$32.87

Times number of days of occupancy
(10 days in this example)

10

Equals the total prorated rent

$328.70

 

$1,000 ÷ 30.42 = $32.87 per day  →  $32.87 x 10 days = $328.70

Example of Prorated Rent Calculation

If the monthly rent to stay in an apartment is $1,000, then the daily rent for that apartment is $32.87 ($1,000 divided by 30.42 days in a month). A new tenant who moves in 10 days prior to the first of the month would be charged a prorated amount of $328.70 ($32.87 x 10).

Understanding how to calculate prorated rent can help tenants know whether they are being charged correctly. It is important to discuss with the landlord, before signing a rental or lease agreement, just when the proration will occur. While some tenants assume they will only be required to pay the prorated amount upon move-in, most landlords do not prorate until the second full month of residency.

Prorated Rent Example in Law

In most jurisdictions, landlords are not required by law to prorate rent when a tenant moves out before the end of the month. This is because the tenant had a contract with the landlord to rent for the entire rental period. The laws regarding landlords’ responsibilities to prorate rent, and calculations for proration of rent vary by state. However, many landlords will require the first full month’s rent to be paid upfront and will prorate the second month’s payment.

Another example of prorated rent might occur in a commercial space. Larry, owner of Print Masters, leases a space for his print shop. He signs a two-year lease for the store front, with monthly payments of $2,000. Because the previous business tenant moved out on the last day of the prior month, the landlord is anxious to get the space filled, and so he allows Larry to move into the space on the 20th of April. Of course, Larry isn’t willing to pay an entire month’s rent for those 10 remaining days, so the landlord assures him he will prorate the rent.

According to the rental agreement, the landlord charges Larry a deposit of $2,000, plus a full month’s rent of $2,000, for a total move-in cost of $4,000, with a proration to occur in the second month. This means the first month of the lease will run from April 20th to May 19th. Larry will then pay the 11-day prorated amount of $65.75 per day, which totals $723.25, on May 20th to bring the rent due date back around to the first of each month. His full month’s rent of $2,000 will then be due on June 1st, and on the first day of each month after that.

Banker’s Month Calculations

Some landlords use a “banker’s month” to calculate prorated rent, rather than average daily rent. While this method makes for an easier calculation, it actually costs the tenant just a bit more, as the month is divided by a smaller number of days. For example, in Larry’s case above, a calculation based on a 30-day month would result in a daily rent amount of $66.67 (as opposed to $65.75). The 11 days of prorated rent would therefore total $733.37, as opposed to $723.25 – a nearly $10 difference.

Related Legal Terms and Issues

  • Landlord – A person who rents a building, apartment, or land to a tenant.
  • Tenant – A person who rents a building, apartment, or land.

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