As a new Landlord it can get confusing when a tenant’s lease term comes up as they have already paid there last month’s rent deposit. Some owners think that they don’t collect rent for that last month and get the tenant to pay a month later as they continue on in a month-to-month lease. The system is designed to give the tenant the ability to save a deposit for the next place they might move into … keep in mind that the last month is always moved to the end or bumped forward on a month-to-month lease.
In this example the tenant signed a lease in the amount of $1650.00 starting on May 1, 2015 and currently paid the following;
May 2015 – First Month’s Rent ($1650.00)
April 2016 – Last Month’s Rent ($1650.00)
If the tenant continues on a Month-to-Month term after the original lease they would give a Cheque in the amount of $1650.00 for April 2016 and April 2017 becomes his pre-paid last months rent.
Let’s say the tenant wants to stay for another 6 months and you have advised them of a rent increase (2% for 2016 as set by the Ontario Landlord Tenant Board) 90 days in advance (June 2016 is the rent increase for example) … here is how he would pay;
April 2016 – $1650
May 2016 – $1650
June 2016 – $1683 + $33.00 ($33.00 is applied to the last month’s pre-paid rent deposit – this brings up the deposit to the new rent increase)
July 2016 – $1683
Aug 2016 – $1683
Sep 2016 – $1683
Oct 2016 – Now becomes the pre-paid last months rent or $1683.00
Of course the tenant can keep bumping the last month if they decide to stay longer. The initial lease signing is still applicable and the tenant always needs to give 60 days notice even when on a month-to-month term.