Q: I’m a landlord renting a single freestanding home in a New York State, not city. Tenant offering to pay rent in advance.
The individual interested in renting the property operates a trucking and transportation business. They’re suggesting paying three months’ rent upfront because their industry experiences significant fluctuations in earnings throughout the year. I’m curious about the legality of agreeing to this proposal. It’s worth noting that I’m not soliciting this arrangement, and I’m not offering reduced rent or any other incentives in exchange for it. Additionally, I don’t intend to apply the advance rent towards the initial three months; rather, it would cover a period towards the end of the year when the tenant anticipates slower business during the winter months.
A:
As a landlord in New York State, it is legal to accept advance rent payments from a tenant, as long as you are not requiring it as a condition of the lease. If the tenant is voluntarily offering to pay rent in advance to manage their fluctuating income, you can accept the payment.
However, there are a few things to keep in mind:
1. Security Deposit Limit: In New York State, there is a limit on the amount of security deposit you can collect. It cannot exceed one month's rent. If you accept the advance rent payment, make sure it is clearly designated as rent and not as an additional security deposit.
2. Proper Documentation: Ensure that you provide a receipt for the advance rent payment and clearly document in your lease agreement how the advance rent will be applied to future months.
3. Escrow Account: Consider placing the advance rent payment in a separate escrow account. This can help protect both parties in case of any disputes or if the property becomes uninhabitable.
4. Interest on Advance Rent: If you are holding the advance rent for an extended period, some states require landlords to pay interest on the money. Check your local laws to see if this applies in your situation.
5. Early Termination: If the tenant decides to terminate the lease early, you may need to refund a portion of the advance rent, depending on the terms of your lease agreement and state laws.
As always, it's a good idea to consult with a local real estate attorney to ensure that you are following all applicable state and local laws and to help you draft an appropriate lease agreement.
A:
Dear Newburgh Property Owner:
You would need your own attorney to approve the acceptance of three months' rent paid in advance. New York State law says that you cannot do so even if you are not the party to bring up the idea.
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