Legal Question in Real Estate Law in California

What is the maximum amount of prepaid rent allowed under California law, and can it be specified as pre-payment for the last months of the tenancy? That is, if it is a lease for 36 months, a six months prepaid rent is for the 31st through the 36th month. I assume the landlord on the other hand, will be required by law to pay reasonable interest for this? If so, what is the appropriate index to use?


Asked on 5/25/12, 5:57 pm

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I have spent several hours researching this question without finding a satisfactory answer. On the face of things, it would appear that prepayments of rent are subject to the limitation of Civil Code section 1950.5 because 1950.5(b) proclaims that advance payments of rent are to be treated as security deposits, which in turn are limited in amount by other provisions of 1950.5. However, there are appellate court decisions shedding some doubt upon the meaning or enforceability of 1950.5(b) with respect to genuine prepayments of rent that are not in fact disguised security deposits. See, e.g., Granberry v. Islay Investments, 161 Cal.App.3d 382. Prior to the adoption of CC 1950.5 in 1970, prepayment was clearly permissible in whatever amount the parties negotiated (Warming v. Shapiro (1953) 118 Cal.App.2d 72). Maybe some other LawGuru attorney can step in and give us a documented answer,

Read more
Answered on 5/26/12, 11:52 am
Anthony Roach Law Office of Anthony A. Roach

Civil Code section 1950.5 imposes limits on security deposits. A landlord may not demand or receive security, however denominated, in an amount or value in excess of an amount equal to two months' rent, in the case of unfurnished residential property, and an amount equal to three months' rent, in the case of furnished residential property, in addition to any rent for the first month paid on or before initial occupancy. (Civ, Code, sect. 1950.5, sub. (c).)

That subdivision, however, does not apply to long-term leases of at least six months, in which advance payment of six months' rent, or more, may be charged.

Read more
Answered on 6/02/12, 2:44 pm


Related Questions & Answers

More Real Estate and Real Property questions and answers in California