Rental Property - Change of Ownership & Rent Apportioning

Llala2011 on 28/11/2015 - 12:10

Hi all,

We recently completed purchase of an apartment in Southbank as our first home. The property was subject to a lease so we cannot move in until next year. The rental month on the lease starts on the 20th of each month. Since we reached settlement on 23/11, we were entitled to a portion of the rent during the rental month from 20/11 until 19/12.

Based on our calculations, the amount we should receive is based on the following:

  • Rental month 20/11 to 19/12 = 30 days
  • Owner A (previous owner) owned the property from 20/11 to 23/11 during this period = 4 days
  • Owner B (us) owns the property from 24/11 to 19/12 during this period = 26 days
  • Rent = $550/wk = $2,390/month
  • Owner A therefore should receive: (4/30*$2390) = $318.67
  • Owner B should receive: (26/30*2390) = $2,071.33

However, the property management agent used a different calculation. He used the daily rental rate to calculate Owner B's portion, then apportioned the remainder to Owner A as follows:

  • Daily rental rate = $550/7 = $78.57
  • Owner B receives: 26 * $78.57 = $2,042.82
  • Owner A receives: $2,390 - $2.042.82 = $347.18

Using the agent's calculation method, Owner A gets more than what he/she is entitled to while Owner B gets less.

After an email exchange with the agent that is now approaching 20 correspondences, the agent is still convinced that my calculation is wrong and that his is correct. I even used a hypothetical situation where had the settlement date fallen in the middle of the rental month (i.e. Owner A and B both owns the property for 15 days), his method of calculation would result in one owner receiving more than the other. However, he chose to ignore my hypothetical situation in his response and kept repeating his own calculation. I also showed him how, had the rental month have 31 days, one owner would actually receive less rent than he/she is entitled to. Once again, he ignored this in his response.

I would really appreciate help from the OzB community in analysing this situation. Are we correct or is the agent's calculation considered acceptable in the industry?

Financial

closed Comments

      • El Cap on 30/11/2015 - 14:28

        Oops, then I was wrong about OP being wrong.

  • snook on 30/11/2015 - 15:20

    Agent, by days, but rounding down at the end of the calculation.
    550/7 = 78.57142857142857

    x 4 = $314.28

    x 26 = $2042.85

  • myfuturej on 30/11/2015 - 15:59
    +2

    No offense, but you just bought something worth over half a mil, and you are worrying about $30.
    Anyway, I don't think the agent will really have anything against you. They usually do the calcs by weeks, we had to terminate a lease before with a mutual agreement with the owner.

  • tramperleo on 30/11/2015 - 20:45

    This is a so simple case. It's so funny using method A, method B, method C etc.
    Regardless which method used, the real daily rental rate is always $78.57.
    You own the property X days, you get X * 78.57. Nothing could be wrong and no any dispute.

    Simply to say, by monthly fee 2390 Owner would win in short month and loss in longer month. So all the misconception of Op came from that the owner A accept 2390 only in last longer month ($45.00 short if 31 days)just because he scheduled the loss will be compensated by the coming shorter month. But now Op comes and wants to share the extra benefit of this shorter month although he never ever has any loss before.

    Also as Op assume, if this is a 31 days month, yes, it seems Op will take more money ( In fact he still take the fair daily rate, nothing more) and owner A seems loss (because 2390 is not enough for 31 days rent). But this's fair to owner A because he already took more on last shorter month.

    P.s, someone above is right, the tenant was rip off by this monthly fee.

  • johnno07 on 30/11/2015 - 22:38
    +14

    I feel like the OP owes me $30 after reading through this thread…

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