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Prepaid Condominium Rents: A Sucker’s Punch


When WC Fields said “A sucker is born every minute” he was not talking about tenants prepaying a year of rent on their condominium but he may very well have been!

When a tenant prepays rent, they are setting themselves up for a serious headache. Take the scenario where the lease is terminated because the apartment is destroyed or sold* and the tenant is no longer required to pay rent for the remainder of the term. Even though the landlord may be legally required to return part of the prepaid rent, the tenant may have to chase the landlord down and hope he does not abscond from his duties. This can be particularly difficult when the landlord lives in another state or county. In such a situation, money which belongs to the tenant could be held up for an unknown and potentially prolonged period of time.

Another pitfall is the loss of control over monthly rental payments. If the rent has been paid in advance, the tenant loses the ability to withhold rent due a breach of the warranty of habitability by the landlord. It will almost certainly be difficult to convince the landlord to return prepaid rent and such a situation may require legal action. Of course, if the rent has not been prepaid, the tenant is in control of his rental payment when a warranty of habitability issues arises.

Many leases include a provision stating that if certain services are lost (i.e. heat, water, air conditioning), then the tenant may receive an abatement of the rent due for the period of time that such services are missing. Again, if the tenant prepays the rent, it will be up to the tenant to go after the landlord and request a return of a portion of what was paid. Rather than maintaining control of what is paid to the landlord, the tenant will have to hope that they are dealing with an honest landlord.

Due to these and other potential risks involved with prepaying the rent, we suggest that the tenant pays rent on a monthly basis. Any inconvenience associated with this arrangement trumps the consequences which a tenant may face from prepaying the rent.

Having said all of the above, we recognize that sometimes the market dictates the terms and so, in an owner’s market, the tenant might just have to suck it up and take one for the team if he or she wants that apartment but if they do they should at least be aware of what they are getting into.

*Believe it or not, one of the common condominium lease forms include a provision in which the lease may be terminated if the owner decides to sell the apartment.

By Ryan V. Stearns and Jerome J. Strelov

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