Once in a great while a tenant will prepay their rent. Shocking, I know, but true. So the question is what should happen to this money?
Owners would argue they should get the money. If you agree consider this: The tenant has prepaid 12 months of rent. The property manager sent the rent to the owner who promptly spent every penny on a cruise to the Bahamas (true story). Six months later the house catches on fire and burns to the ground. The house will not be habitable for several months so the tenant has to move to a new property. Should the tenant get six months of prepaid rent back? Absolutely!
But the owner has spent the money and does not have it to give back to the tenant. Who is ultimately responsible for the payment of the rent? The property management company would be responsible, as they should have held the money in a trust account until the tenant actually owed the rent. It should never have been sent to the owner.
Another variation on this theme is the tenant who barely qualifies for a property. They offer to pay six months of rent if they can rent the property. They move in and two months later ask for their prepaid rent money back. Does the landlord and property manager have to return the rent? Absolutely! If the tenant does not get their rent back they can sue both the owner and the property manager. There are tenants out there who have figured out this scam so they can rent a property that they would never qualify to rent without the added incentive of pre-paid rent.
But the tenant signed an addendum to the lease saying they would not be required to give the money back. What is in the lease does not matter. You cannot make someone give up their legal rights. In this case they have the legal right to the money and cannot sign it away.
Moral of the story – be very, very careful with prepaid rent. If you decide to take it be sure to keep it in a separate account or have your property manager keep it until the rent is due.