Understanding Prorated and Month-to-Month Rent Payments

Overview

When setting up rent payment schedules, landlords and tenants can choose between Prorated Rent or Month-to-Month Rent, along with two different End Date Types. This guide explains how each model works, how payments are calculated, and what happens in different scenarios, including lease start and end dates.

Prorated Rent ModelHow It Works

• First Month: Rent is calculated based on the number of days remaining in that month.

• Middle Months: Charged at full monthly rent.

• Last Month: Charged at full monthly rent, regardless of whether the lease ends mid-month or on the last day of a month.

• Flexible End Date: If the lease ends mid-month, the landlord and tenant must agree on how the remaining days' rent will be handled (e.g., refund or retained charge).

• Month-End Date: The lease ends on the last day of a month, and the tenant pays the full final month's rent.

Example ScenariosScenario 1: Lease from March 10 to June 30 ($1,500 rent per month)

• March 10 - March 31: Rent is prorated for 22 days → (1,500 / 31) * 22 = $1,064.52

• April & May: Full rent of $1,500 each month

• June: Full rent of $1,500, regardless of actual end date.

Scenario 2: Lease from August 18 to November 12 ($2,000 rent per month, flexible end date)

• August 18 - August 31: Rent is prorated for 14 days → (2,000 / 31) * 14 = $903.23

• September & October: Full rent of $2,000 each month

• November: Full rent of $2,000 (Tenant moves out early on Nov 12, but final month’s rent is charged in full. Refund for unused days must be agreed upon separately.)

Month-to-Month Rent ModelHow It Works

• First Month: Always charged in full, regardless of move-in date.

• Middle Months: Full rent charged monthly, with the due date matching the lease start date.

• Last Month: Always charged in full, whether the lease ends mid-month or on a monthly cycle.

• Flexible End Date: Tenant can choose a move-out date that does not align with the monthly cycle. However, rent is still charged in full for the final month, and any adjustments must be agreed upon separately.

• Month-End Date: The lease ends at the next full month cycle, with full rent charged.

Example ScenariosScenario 1: Lease from January 15 to April 28 ($1,500 rent per month, monthly end date)

• First Month (Jan 15 - Feb 14): Full rent of $1,500 charged.

• February & March: Full rent of $1,500 each month.

• Last Month (April 15 - May 14): Full rent of $1,500 charged (even though tenant moves out on April 28, they are charged for April 15 - May 14). Any adjustment must be agreed upon separately.

Scenario 2: Lease from October 5 to February 20 ($2,000 rent per month, flexible end date)

• First Month (Oct 5 - Nov 4): Full rent of $2,000 charged.

• November - January: Full rent of $2,000 each month.

• Last Month (Feb 5 - March 4): Full rent of $2,000 charged, even though the tenant moves out on February 20. The landlord and tenant must agree on how the extra days' rent is handled.

End Date Types1. Monthly End Date (Fixed Cycle)

• The lease always ends on the last full billing cycle.

• The tenant is charged full rent for the final month, regardless of the actual move-out date.

• Example: Lease starts March 10 and ends June 30 → The tenant pays full rent for June, even if they leave earlier.

2. Flexible End Date (Custom End Date)

• The lease can end on any day within a month.

• The final month is still charged at full rent, and any adjustment for unused days must be agreed upon separately.

• Example: Lease starts April 8 and ends August 18 → The tenant is still charged full rent for August 8 - September 7, even if they move out on August 18.

Edge Cases & Important Considerations

1. Short-Lease Tenants & Final Month Adjustments

   • If a tenant moves out before the full final month is completed, the landlord and tenant must agree separately on whether unused days will be refunded or retained.

2. Leap Year & Different Month Lengths

   • Prorated rent is calculated based on the actual number of days in a month (e.g., 28 days in February, 31 days in July).

3. Handling Overlapping Days for Next Tenant

   • If a flexible end date causes overlap with a new tenant’s move-in date, the landlord must decide whether to adjust rent or find a different solution.

4. Auto-Payment Schedules & Billing

   • Automated payments should align with the chosen rent model to avoid incorrect billing.

Both Prorated Rent and Month-to-Month Rent offer flexibility for landlords and tenants. Understanding how End Date Types impact final payments ensures smoother lease transitions. By clarifying how payments are structured, both parties can avoid disputes and create better rental agreements.

For further assistance, refer to the Haletale Help Center or contact support.