Last month's rent
A separate deposit that specifically covers the final month of the lease. Different from a security deposit under most state laws. Not required everywhere.
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Part 1 of 4
Why a seller cares
Last month's rent is a separate prepayment, and when a rental is sold it transfers to the buyer like the security deposit. Landlords who forget it at closing owe it later.
Part 2 of 4
A simple example
Your tenant paid first and last month at move-in. At closing, the last month's rent is credited to the buyer, who will apply it when the lease ends.
| The money | At the sale of the rental |
|---|---|
| Security deposit | Credited to the buyer at closing |
| Last month's rent | Credited to the buyer at closing |
| This month's rent, already collected | Prorated to the buyer for the days after closing |
Every dollar the tenant paid ahead belongs with the property, not with the seller.
Part 3 of 4
What people get wrong
That last month's rent and the deposit are the same thing. Many states treat them differently, and both have to transfer.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines last month's rent in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
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