Lease Agreement Vs. Pro Rate

If the pro rata amount isn't in your lease, get it in writing from your landlord before signing.

When people look for a place to live, they usually have to sign a rental lease agreement. The agreement protects both the tenant and the property manager or landlord from legal problems. You may hear your landlord or property manager talk about pro rata when discussing what you will pay. Your monthly rent and pro rata are related, but they are not the same thing.

What the Lease Does

Your lease sets out the terms to which you must adhere while renting the property. Rent is one of these terms. Usually, the rent amount is expressed in dollars per month. Property managers and landlords usually set up their leases so that you pay rent on the first of each month, and rent is based largely on the current property value. With a lease, the amount of days you cover with the rent payment are determined by the calendar. With the exception of February, which has 28 days, your monthly rent covers either 30 or 31 days.

What Pro Rata Does

Pro rata, better known as prorating, charges you a per-day rate for occupying the rental unit. Typically, landlords and property managers divide the contract's lease amount -- the amount of rent you pay per month as specified in the lease -- by the number of days in the month to determine your prorated amount. For example, if you paid $1,000 in rent and the month had 30 days, the prorated amount would be approximately $33.33 per day. Some landlords or property managers use variations on this basic concept. For example, they may prorate by doubling the per-day rate.

Static Vs. Flexible

With a lease, the monthly rent amount is static and does not change for the duration of the lease. With pro rata, however, the landlord or property manager multiplies the daily pro rata amount by the number of days you stay in the rental unit. For this reason, pro rata totals are always flexible. In some instances, a landlord may set a pro rata amount independent of the monthly rent amount, but most landlords and property managers use the monthly rate as a base.

When Lease and Pro Rata Are Used

Pro rata is used only when the tenant needs to stay for a period greater than stipulated in the lease agreement. For example, they may be starting a new job in a new city in the middle of the month -- this doesn't work under a traditional lease that starts rent payments on the first of the month. The solution is to charge for each extra day, or to prorate. The same technique is used when the tenant needs to stay a few extra days beyond the lease term. Pro rata often is not inseparable from the lease, however. Often, property managers and landlords include a pro rata clause directly in the lease that explains how the property manager or landlord will charge for occupancy beyond that stipulated in the lease.

References

• Montgomery County, Maryland: Apartment and Condominium Lease