Background for the question, not the question itself ~
I work for a rental agency, and they have a practice of calculating prorated rents by dividing by 30 days instead of 31 days. If you stay 20 days into a month you are charged 20/30 of the rent instead of 20/31. If you stay 30 days you are charged the same as if you stayed the full 31 days.
They say it’s a standard practice in banking (let us assume that’s true).
However, our leases do not mention this and tenants always, invariably complain to me that they are being overcharged by $30 or $70 or whatever.
Just because it’s common doesn’t mean it’s legal.
I know most loan papers I’ve seen that have such prorating rules will specify them in the document or tables attached before you sign.
They tried at first to convince me that it “would average out”. But I showed that it won’t, that it’s always calculated to their favor.
Then they tried to say it was “just easier”, but that is belied by the fact that when the month in question is Feb, they will divide by 28 or 29 to prevent an error in the tenants’ favor.
And of course they tried to tell me it was such small amounts that “nobody cares”, but they all tell me they do, and the company obviously cares very much every Feb.
The Question ~
Is there any legal basis for their practice?
Is it codified somewhere that it’s OK even though mathematically incorrect? (I recall that at one time Michigan law said pi=3.0 instead of 3.14 for purposes of charging for things like wire and cloth, so any law is possible.)
I’ve come across this question in a different context, but the rule should still apply.
I’m responsible for calibrations of safety equipment. Equipment can be required to be calibrated every 30, 60, or 90 days and so on. Calibrating these on the same day of the month fulfills the requirements, even though some months have 31 days.
I know this is revelant because I saw it on Judge Judy. It was one of those roommate disputes.
As far as I know, the landlord can draw up any terms for a rental/lease they please (within reason and US law). As they say, its a free country, and if someone doesnt like the 30 day prorating policy, they can theoretically go live somewhere else. But since most places do this, the prospective tenant is compelled to take the shaft. I think it should be illegal, but lending interests make afar larger campaign contributions than tenants do.
mangeorge It hardly seem comparable. In your case things would average out, not the case here. CynicalGabe As I mentioned, the landlord did not specify that this would occur. If he had, then things would be different (as in my example of the bank with the terms spelled out in advance.)
It was a way of prompting you to give us the state, so we could look it up in the actual laws for your state. Based on past questions, rents and leases tend to have 50 different sets of laws, one for each state.
It’s comparable in that most rule of law is based on what is reasonable. If you charge by the day, rent would change monthly. The balance is that if you’re paying for a 30 day month, you get 7 days/year rent free. Well, 5 or 6 if you count Feb, depending on the year.
If you want to rail against something unfair, take a look at what some landlords do with “security deposits”, which they treat as a landlord bonus.
Pick any state. I’d like to know for sure what it is in any state at all. mangeorge - no we do not charge by the day. As stated, the charge is by the month. Those “7 days/year” are not “free” to the client, who is paying for actual full 31 day months. That’s the rate in the lease. If our leases had been written for 30 day months, then there would be no problem, but clearly that’s not what happened. The benefit of this maneuver is strictly in favor of my employer, never the client.
The average month is 365.24/12 = 30.44 days long (approximately) – which is neither 30 nor 31. Rounding to the nearest full day would make it 30 days per month. As OP discusses a calculation, they could easily use 30.44 rather than 30 and be mathematically correct. This is not possible in other situations.
Well, ok. I was just trying to ease your mind.
But you did imply, in your discussion of the formula, that they used a 30 day month. Do they say in one part of the contract that the month, then in another that it’s 31 days?
In all things I know of that are charged by the month, cable tv and newspaper subs for example, it makes no difference if the month is 30 or 31 days. All are months. Should rents be higher in 31 day months?
I’d think this would be perfectly fine, if the company didn’t change the practice in February. That’s fucked up.
FWIW, the US Military uses this method of prorating. And it doesn’t matter what state or country you’re in. Your daily pay is whatever monthly pay should be divided by 30. So if someone gains or looses jump pay, propay, BAS, BAH, or any extra kind of pay - or NG soldiers who only work a couple days a month - they all get prorated pay based on the “Divide by 30” rule. But it stays the same in February too. If you gained Hazardous Duty Orders and Jump Pay on Feb 16th, you’d earn $60 dollars of Jump Pay that month.
Monthly Jump Pay is $150/per month. No matter which month. But if you work less than a month, in any month, it is $5 per day.
The definition of “month” may be in the lease or if not, a reference to what definition they’re using. The language would read something like "any term not defined herein shall have the meaning ascribed to it in <state> real estate code section XX.X. "
IMHO, the company that uses a 30-day month except for February is walking a thin line. They should either use the 30-day month standard or not.
I know that in Georgia and Texas (for equipment leasing specifically) some companies base their leases on a 31 day month, some on a 30 day month, and some on a 4 week (28) day month. The “4 week month” method results in one extra lease payment per year - and it’s perfectly legal. So long as the term “month” is spelled out in the lease agreement it can be pretty much anything the lessor wants it to be.
What I’m doubting is the existance of such a definition in such a code.
If there is one, I’d like to know. That’s the question.
Otherwise, there is no use trying to create new definitions of what is meant by a month and what is meant by prorate. It’s $2000 for December, that’s the actual month of December, all 31 days, not some fraction of a year with 30.44 days per month.
Sure, I could make excuses for them and say “Well, just pretend it was $2000 for a 30 day month and the last day was free.”
But if I’m making up rationalizations, why stop there?
Why not say “Let’s pretend it was $2000 for Dec 1 and the other 30 days were free, so you get zero back.”
But if I said that, I would be clearly lying to cover up for a crock. And that’s what I want to avoid. I want to deal honestly with my clients and convince my boss to deal fairly, but I don’t want him to throw some real estate code back in my face.
Is there such a code in any state?
I doubt that you will find the answer to your question in a law anywhere. You might find a legal definition for “month” somewhere, but it may not really matter anyway. Your issue actually deals with prorated rent, not what the meaning of “month” is. Any lease that I have signed has the prorated rent for the first and last months spelled out explicitly in the contract. If I didn’t like the amount specified, I could persuade the owner to change it or I could take my business elsewhere. How the amount was figured was not in the contract. The last month’s rent would read something like “$X.xx per day up X days, then full rent is due.” I would tell clients that the last month’s rent is specified in the contract and perhaps they should have read it before signing it. Of course, I would be more polite about it, but that’s essentially the message.
Is this coming up for you because January 31, 2005, is on a Sunday and people moving out at the end of January are expecting credit for Monday, Jan 31?
