We are In the process of taking over a portfolio for a new client and puzzled over the lease end dates. Every tenant has a different lease end date. The dates mirror the date the lease began (so an August 11 start date means the lease ends on August 11). I can certainly appreciate the logic of the former manager when creating these lease end dates, but we are having a hard time understanding any benefit gained.
We use what the attorney’s like to call a “Fixed End Date” lease. This type of lease provides a certainty of the term of the lease to tenants and owners. It will specify the exact lease end date. We always end our leases on the last day of the month. This means the tenant has until 11:59pm on the last day of the month to vacate. Thankfully, almost all tenants that plan on leaving at the end of their lease do not wait until the last minute!
There are some very good reasons to end leases at the end of the month. Here are three reasons why.
It took me a while but at some point I realized that the KISS (Keep It Simple Stupid) Principle was a pretty good motto for my actions. I would over-think an issue like when a lease end date should fall. I might have leases ending every day of the month because I thought it was fair to have an exact one year lease. (OK..I never really thought that. But I thought like that.) I would do things creatively for the sake of doing them. Of all the simple actions an owner can take, always choosing a month end date for your leases will prove to be one of the easiest.
Take a look at your lease. I bet it identifies a certain number of days for notices such as non-renewal or to vacate. Sure, we can all pull out calendars and count backwards to specifically identify these dates. Try this..ask another person to tell you what date a notice is due if it is required 30 days prior to August 11. See if you agree. Why make this complicated and confusing? This is why most leases state late fees are due on a specific date after the due date (for instance five business days after the first of the month due date).
Pro-ration of Last Payment
Unless you are going to collect the final rent payment at the beginning of the lease, the possibility of confusion and disagreement will increase with an odd lease end date. Again, ask somebody how they calculate pro-rated rent for a month when the lease ends August 11. I am pretty confident I know the correct answer (I use to be a banker) but I have had this discussion with enough people to realize it can be confusing. You better add an entire clause in your lease as to how much that final pro-rate payment will be with the odd lease end date.
Why go through all of this hassle? A simple rule.
Thirty days hath September,
April, June and November;
February has twenty eight alone
All the rest have thirty-one
Except in Leap Year, that’s the time
When February’s Days are twenty-nine
Side note: Leap Years are also US Presidential election years.
Now, lets start writing leases with last day of the month lease end dates!