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Last Month’s Rent or a Larger Deposit? Which is Good?

A few rules are needed to be followed when a tenant move-in. Landlords should consider the state laws to know what he is supposed to do while the tenants are moving in. Some laws allow the landlords to have their own rules and regulations. Also, it’s completely legal to collect a security deposit from the occupants.

A landlord entrusts tenants with his property. But there’s no surety they will take care of the property just as the landlord himself. Hence, it is advised to collect last month’s rent or a larger deposit from occupants before they move in.

However, landlords get confused with whether to collect the last month’s rent in advance or a larger deposit. Do you know which one is actually good? And what happens when you take a deposit from your tenants. To understand which one is good you will have to first know what landlords do with deposits and what is the difference between taking last month’s rent in advance and collecting a larger deposit.

What is Security Deposit?

Before talking about this, let’s know what is a security deposit and why landlords collect it from occupants.

It is an amount taken by landlords in advance from tenants which is equal to one or two months’ rental price that the landlord refunds to tenants when they move out. Or, some use the amount to cover the damage repair costs that occurred during the tenant’s occupancy.

So, this is actually important to take a month’s rent in advance as a security deposit. If the landlord doesn’t find any damages caused by the tenants then they refund the entire security deposit. The landlord has the legal authority to use the security deposit to repair the damages.

When a landlord takes a security deposit, they must mention the amount in the rental agreement. It is a legal authority of the landlord to keep a security deposit to cover all the damage costs caused by tenants. But they must mention the date and exact amount of the security deposit collected by tenants on the rent agreement.

Now let’s know what is the last month’s rent. Later we will discuss the basic difference between both and know which one is good.

Read: 8 ways to make your rental property attractive

What is Last Month’s Rent?

Many landlords in Baltimore collect last month’s rent as a security deposit. For example, if the monthly rent is $1000 then before the tenant move in, the landlord will collect two months’ rent in advance that is $2000. One will be the first month’s rent in advance and the other is a security deposit.

You can understand in this way- if the tenants are on an agreement of 11 months then during their last month of occupancy they will not pay the rent. It will be either adjusted by the landlord or they have the right to deduct maintenance costs from the security deposit.

This is collected by homeowners as a form of insurance against the tenants’ move out without any prior information or notice. Even if the tenants will provide notice but at the last minute then the landlord has the right to keep the last month’s rent. And if the tenant gives prior notice at least one month before moving out then this will be adjusted in the last month’s rent by the landlord.

Last month’s rent collection offers a higher chance of getting quality tenants. because nobody likes to pay a huge amount in advance. Because for many, larger deposits become a barrier. You will ultimately find a few applicants as it’s not easy for everyone to pay such a substantial amount.

Well, being a landlord you must aware of the fact that tenants have the right to terminate the agreement before the completion of the agreement. And if they will terminate the agreement by giving prior notice then you will have to refund the amount. You may have to face loss due to this, but you can hold their security deposit unnecessarily.

Difference Between Last Month’s Rent and a Larger Deposit

Both the terms might be sounding similar to you. Well, that’s because they serve the same purpose. Hence, it’s difficult for common people to know the difference between the last month’s rent and a larger deposit.

Here in this article, we will talk about this to know what’s the biggest difference between both the terms. And what are their consequences?

You don’t have to return the last month’s rent because. The tenants will simply not pay the last month’s rent. But the security deposit is not your income. This is collected from tenants to cover the damage costs caused by tenants. And if they have not caused any damages then you will have to refund the full amount to the occupants.

This is the main difference between last month’s rent and a larger deposit but, they both are awesome ways to check the financial stability of applicants. You can see how much they are sincere and willing to rent your property. This shows their interest in your property for the long term.

If you have found your dream tenants for your Baltimore rental home then now it comes to collecting last month’s rent in advance or a larger deposit. Security deposits ensure security. Even if they cause damage you can cover the damage costs with that and if not you can refund the price.

But, if you are planning to collect the last month’s rent in advance then you should know its pros and cons.

Pros and Cons of Last Month’s Rent

The main advantage of last month’s rent is getting cash from upfront. This will help you cover the expenses you have spent on your property for maintenance. Also, you can cover the last month’s rent if your tenants terminate the agreement within any notice.

If you will not mention it in your rental agreement and the tenants are gonna live for more than a year then you may forget that you already had taken their last month’s rent. This will lead to an argument. Also, this can be a problem for the tenants if the landlord will get changed.


It is good to collect a security deposit from your tenants because last month’s rent has some cons which can affect your business. And if you are inexperienced, have no idea about running a real estate business properly then get the assistance of a professional property management company.


Property management is a huge responsibility. If you think you are unable to manage your property in Maryland then hire a property management company to look after the matter. They would deal with all requirements professionally and you will be kept away from all the tantrums. So, hire Property Management Company in Maryland to find high-quality tenant and you will be able to get a good rental property in Maryland.

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