Deposit Basics
Security Deposit
Money a tenant pays a landlord before moving in, held as financial protection against unpaid rent or property damage bey...
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Full Definition
Last month's rent (LMR) is money collected at the start of a tenancy that is designated to cover the tenant's final month of occupancy. Unlike a security deposit, it is not refundable -- it is applied as rent when the final month arrives. However, several states treat LMR as functionally equivalent to a security deposit for purposes of caps and interest requirements. In Massachusetts, for example, last month's rent must earn interest at the same rate as a security deposit. The total of a security deposit plus last month's rent often counts toward a state's aggregate prepayment cap. If the landlord collects LMR and the tenant gives proper notice and vacates as expected, no further payment is owed for that final month.
Key Takeaway
A prepayment of the final month's rent collected at move-in, which is legally distinct from a security deposit and governed by different rules.
Related Terms
Deposit Basics
Deposit Cap
A statutory limit on the maximum amount a landlord may collect as a security deposit, typically expressed as a multiple ...
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Deposit Interest
Interest that some states require landlords to pay on the security deposit they hold, calculated at a statutory or bank ...
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Deposit Receipt
A written acknowledgment a landlord must provide confirming the amount and terms of a security deposit collected from a ...
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See how the rules around last month's rent apply in popular states:
Deposit Limits