Do you collect a last month's rent?

I have always collected the maximum amount allowed under MA law prior to allowing a tenant to take possession, which is a FMR, a LMR equal to the FMR, a SD equal to the FMR as well as a reasonable key fee (currently I get $100.00).

For those of you who do collect a LMR how do you handle increasing it every year? In the past, I've just required them to pay any additional rent increase when they renew for another year. This week I had tenant move in & am trying something new. On the receipt for their LMR I stated that it was a partial payment towards their last month in the unit. Additionally, I explain that if they stay multiple years & have rent adjustments during the course of their tenancy, we will just apply the amount they have on deposit towards the actual rent for their last month.

For those of you who do not collect a LMR, why don't you?

I don't quit see the point. It might pay for their last month's rent, or they might give notice, use the "last month's rent" and then refuse to go. So the landlord really isn't any more protected.

Around here it is lucky to get first and SD. Trying to get last month up front would take a special applicant.

Ken, According to the horrendous 2019 laws:

Not anymore, but when I did I saw it as a larger security deposit.

I said in the Rental Agreement that the amount of $XX.xx that is paid on this date labeled LMR will be applied to the rent due at the rate in effect at the time that proper notice to vacate is given.

Well a real estate agent told me a few years ago that a group of lawyers from the Amherst area had formed a company to buy rental properties and they stopped collecting security deposits because of Ma laws that made too many problems even for them to use.

Thats when I started to do the same (and returned the ones I had with a note,) " In these times of tight money, since you have been such a good tenant, we trust you will leave the property clean and free of damages)

If there were enough damages, I would take it to small claims,..

I think the tenants the we returned the SC deposits actually have appreciated this and maybe thats why they have behaved.

In California we have a choice:

First Months Rent Plus a security Deposit

or

First Months rent and last months rent.

It's interesting to see how LLs in different states address move in monies & what other states allows a LL to collect during what I call the "Honeymoon Phase" aka prior to acceptance & move in.

A couple of things that I should have mentioned are that for both the SD & the LMR the tenant earns interest. During the tenancy the SD is still the tenant's money & remains so until there is a final accounting.

The LMR is considered the LL's money from day 1 & it doesn't have to be put into any special account. However, if the LL chooses not to put the money in an interest-bearing account the LL must pay the tenant 5% interest once the initial 12 months are over and every 12 months thereafter until the tenancy ends. I put all of my LMRs in an interest-bearing account to avoid paying the 5%. Rarely do I have it happen but if a tenant only stays 12 months the LMR deposit is used to pay the 12th month & they get no interest. If they stay longer as most of mine do, they are given the LMR's earned interest at the start of the 13th, 25th,37th, etc months. My tenants seem to stay 5-8 years.

When a MA LL accepts a SD they must follow some very strict laws including giving the tenant a very specifically worded statement of condition, depositing the monies in an interest-bearing escrow account that is protected from any possible LL creditors, the bank / credit union must be located in MA. If the LL fails to completely comply with all of the requirements & ends up in court over it the Judge "shall not may" require the LL to pay treble damages. Unless you're careful it's pretty easy for a LL to mess up the paperwork. I've seen a tenant awarded treble damages due to an incorrect address for the bank holding the SD.

IMO once you have a good system in place for handling SDs & LMRs it's not too difficult to be in compliance.

Steve,

Why I don't:

-an applicant with first and SD is a unicorn in my area.

-MY judge says he could not evict because the res HAS PAID in advance for the month the LL wants them out. The LL is HOLDING rent.

-I have not collected SD for the last 1000 leases. I collect a Nonrefundable RTO /RentLock Fee in place of a SD. Tougher screening and 2 Minute In Home Visit helps me get better people , plus we stress expectations at move out.

ZERO TOLERANCE on latrs means they don't owe much.

Brad, you only do RTO now?

Steve I do like that you are trying to collect as much money up front as you can. That doesn't always work as well as i would like it.

I had someone well qualified with a 685 credit score. They have been renting in the same building for 32 years. They don't have that extra $1,200 to pay that extra month. Does that mean I should dump them and see if someone else who is as qualified but has that extra $1,200 in hand? Hmmmmmm I am where lake effect snow flies starting early to mid Nov.

Ray-N-Pa, I completely agree that each LL has to find what works best for them in their location & not be too concerned about what others are able to do elsewhere. MA is similar to NY & a few other states but fortunately it's not as restrictive as CA.

I don't collect a SD because the requirements to hold it are prohibitive. Last Months rent is MUCH easier. So first and last is what I get.

This process began after a peeps lawyer called in SD and interest tracking for EVERY account and EVERY peep.