Collecting first and last month’s rent, plus a security deposit, is a common way for landlords to protect their investment and secure reliable tenants. By requiring these payments up front, landlords reduce the risk of missed rent, cover potential property damage, and simplify the move-out process.
Understanding how these amounts interact and what state laws permit helps landlords stay compliant and avoid disputes in the future.
Breaking Down First and Last Month’s Rent Plus Security Deposit
When a lease agreement requires first and last month’s rent plus security deposit, it means the tenant pays three separate amounts up front before moving in:
First month’s rent: Covers the tenant’s very first month in the property. If the move-in date is mid-month, calculate and charge a prorated payment.
Last month’s rent: A prepayment for the final month of the lease. It guarantees that rent is already covered when the tenant moves out, even if they decide not to pay at the end of the lease.
Security deposit: A refundable amount that landlords hold in case of property damage, unpaid utilities, or other lease violations. Landlords typically cannot use the security deposit to cover normal wear and tear.
For reference, let’s say the rent is $1,700 per month. At lease signing, the tenant would need to bring $5,100 to cover the first month’s rent, the last month’s rent, and the security deposit. While this considerable upfront cost may seem like a stretch for the new tenant, it provides landlords with a financial cushion and helps prevent problems with missed rent down the road.
Landlords should clearly document each amount in the lease agreement as separate line items and provide tenants with receipts to support their claims. Having written documentation helps avoid confusion about which payments are refundable and ensures compliance with state and local laws.
Why Landlords Collect These Payments
Collecting the first and last month’s rent along with a security deposit gives landlords peace of mind and helps keep their rental business on solid ground.
These payments serve several purposes: they reduce the risk of missed rent, cover damage repairs if needed, and maintain steady cash flow throughout the lease. If a tenant moves out early or skips a payment, the landlord already has funds to soften the financial hit.
Upfront payments also encourage tenants to fulfill their lease obligations. Prepaying the last month’s rent gives them a financial reason to stay until the end of the term, which reduces turnover headaches. Because the tenant has already paid the last month’s rent, landlords can focus on inspections and returning the security deposit rather than chasing one more rent check at the time of move-out.
Ultimately, having these funds available helps landlords stay current on mortgage payments, pay for routine maintenance, and handle unexpected repairs with less stress.
Legal Limits and Compliance
When landlords collect the first and last month’s rent along with a security deposit, they must follow state and local laws that set limits on what they can charge and how they manage those funds. Many states cap security deposits at 1 or 2 months’ rent. Some states also limit the amount of advance rent.
In many states, landlords must also:
- Provide written receipts or disclosures for each payment.
- Store the security deposit in a separate or interest-bearing account.
- Return the deposit (minus allowable deductions) within a set number of days after move-out.
- Provide an itemized list of deductions if you withhold any portion of the security deposit.
Massachusetts, California, and a handful of other states have exceptionally detailed rules for deposits and prepaid rent. Therefore, familiarizing yourself with your state’s requirements and putting clear language in the lease agreement helps you stay compliant and avoid legal disputes.
State Laws on First and Last Month’s Rent
Let’s explore which states allow landlords to collect additional rent upfront at lease signing, beyond the standard first month’s rent and a security deposit. It also highlights the maximum amounts permitted for rent prepayments.
Please note that local jurisdictions, including cities and counties, may impose their own rules that differ from statewide regulations. Always review both state and local laws before collecting or paying prepaid rent.
Alabama
Alabama places no restrictions on how much rent a tenant can prepay at lease signing.
Alaska
By default, Alaska landlords may collect the first month’s rent plus up to 2 months’ rent as a security deposit, regardless of how it’s labeled. For rentals with monthly rent above $2,000, this limit does not apply (AK Stat § 34.03.070).
Arizona
Arizona landlords may require a security deposit of up to one and one-half months’ rent. Tenants may choose to prepay additional rent, but landlords cannot require prepayment beyond this limit (Ariz. Rev. Stat. § 33-1321(A)).
Arkansas
State law in Arkansas does not cap advance rent payments, leaving the amount to be determined by landlord and tenant agreements.
California
Tenants in California may prepay rent only when the lease term is at least 6 months and the prepaid amount covers at least 6 months of rent. Otherwise, landlords may collect just the first month’s rent plus a security deposit, which is typically equal to 1 month’s rent (Cal. Civ. Code § 1950.5).
Colorado
Colorado landlords may collect the first month’s rent plus the maximum security deposit, which is 2 months’ rent (CO Rev Stat § 38-12-102.5). However, there is an exception for mobile homes, where it is 1 month’s rent (CO Rev Stat § 38-12-207).
Connecticut
Connecticut landlords may collect the first month’s rent plus the maximum security deposit, which is 2 months’ rent or 1 month’s rent, for tenants 62 years and older (Conn. Gen. Stat. § 47a-21(b)).
Delaware
Tenants in Delaware may prepay any amount of rent, as the law sets no limit on advance rent payments.
Florida
Landlords in Florida may accept any amount of prepaid rent, since state law sets no limit. However, if a tenant pays rent for more than the next rental period (for example, more than one month in advance), the landlord must treat that payment like a security deposit and follow the same rules for holding and handling it (Fla. Stat. § 83.49(1)).
Georgia
Georgia law does not cap the amount of rent a landlord can collect in advance. Prepaid rent is treated separately from a security deposit and does not count toward the state’s deposit limits (Ga. Code § 44-7-30(3)).
Hawaii
Landlords in Hawaii may collect the first month’s rent plus a security deposit of up to 1 month’s rent. They may also require an additional deposit of up to 1 month’s rent for a pet (excluding assistance animals).
State law prohibits the collection of other advance payments. By mutual agreement, tenants may apply the security deposit toward the last month’s rent if they give 45 days’ notice of vacating, and the landlord still retains the right to seek damages for unpaid rent or repairs (HI Rev. Stat. § 521-44(b)).
Idaho
Landlords in Idaho may accept prepaid rent without a statutory maximum, provided it is kept separate from security deposits.
Illinois
Illinois law places no limit on prepaid rent, allowing landlords to accept any amount agreed upon in the lease.
Indiana
No state law or statute in Indiana restricts the amount of rent that landlords can collect.
Iowa
Landlords in Iowa may collect the first month’s rent plus a security deposit of up to 2 months’ rent. The law does not restrict the amount a landlord can require as a deposit in advance. As a result, any prepaid rent is separate from the security deposit limit (IA Code § 562A.12).
Kansas
Kansas does not impose a limit on advance rent payments.
Kentucky
In Kentucky, tenants can prepay rent without a statutory cap.
Louisiana
Louisiana law does not restrict the amount of rent a tenant may prepay.
Maine
Landlords in Maine may collect the first month’s rent plus a security deposit of up to 2 months’ rent in most cases (Me. Stat. tit. 14 § 6032). For mobile home rentals, the limit is higher, up to 3 months’ rent (Me. Stat. tit. 10 § 9098(1)).
Maryland
Beginning October 1, 2024, Maryland landlords may collect the first month’s rent plus a security deposit capped at 1 month’s rent. State law defines security deposits broadly to include last month’s rent paid in advance. The only exception is for tenants who are receiving utility assistance. In that case, landlords may collect up to 2 months’ rent as a deposit if agreed to in writing (Md. Code, Real Prop. § 8-203).
Massachusetts
In Massachusetts, landlords may collect the first month’s rent, last month’s rent, and a security deposit equal to 1 month’s rent. When collecting last month’s rent upfront, it must equal the first month’s rent, and the landlord must provide a receipt and pay annual interest on that payment (Mass. Gen. Laws ch. 186 § 15B(1)(b), (2)(a)).
Michigan
Michigan law allows landlords to collect the first month’s rent plus a security deposit. The security deposit cannot exceed one and one-half months’ rent (Mich. Comp. Laws § 554.602).
Minnesota
Minnesota does not set a statewide limit on prepaid rent.
Mississippi
There is no statutory cap on prepaid rent in Mississippi.
Missouri
Missouri law does not limit the amount of rent a landlord may accept in advance.
Montana
In Montana, landlords may accept prepaid rent in any amount, since there is no statutory maximum.
Nebraska
Nebraska law caps security deposits at one month’s rent, with an optional pet deposit up to one-fourth of a month’s rent. However, the law makes a clear distinction between security deposits and prepaid rent. Landlords may accept prepaid rent without a statutory limit (Neb. Rev. Stat. § 76-1416).
Nevada
In Nevada, landlords may collect the first month’s rent plus a deposit, but the total of all deposits, whether labeled as a security deposit, last month’s rent, or a surety bond, cannot exceed 3 months’ rent (Nev. Rev. Stat. § 118A.242(1)).
New Hampshire
New Hampshire landlords may collect the first month’s rent in addition to the maximum security deposit, which is 1 month’s rent or $100 (whichever is greater). If paying rent quarterly or less often, the deposit collected alongside the rent still cannot exceed the equivalent of 1 month’s rent (N.H. Rev. Stat. § 540-A:6(I)(a)).
New Jersey
In New Jersey, landlords may collect the first month’s rent in addition to a security deposit of up to one and one-half months’ rent (N.J. Stat. § 46:8-21.2). Landlords may increase the deposit annually, but by no more than 10% of the current deposit.
New Mexico
In New Mexico, landlords may collect the first month’s rent, the last month’s rent, and a security deposit. State law caps the security deposit at 1 month’s rent for leases shorter than a year, but allows larger deposits for annual leases if the landlord pays interest on the excess (N.M. Stat. § 47-8-18(A)). The statute makes clear that last month’s rent is not considered part of the deposit (N.M. Stat. § 47-8-18(B)). While the law does not expressly forbid other forms of prepaid rent, it leaves uncertainty about whether collecting more than the first and last month’s rent would be enforceable.
New York
In New York, landlords may collect the first month’s rent in addition to the maximum security deposit, which in most cases is 1 month’s rent (N.Y. Gen. Oblig. Law § 7-108(1-a)(a)).
North Carolina
North Carolina places no restrictions on the amount of rent a tenant can prepay.
North Dakota
North Dakota state law does not cap the amount of prepaid rent a landlord may accept.
Ohio
Ohio does not limit the amount of rent a tenant can prepay.
Oklahoma
Oklahoma law does not impose a maximum on advance rent payments.
Oregon
In Oregon, there is no statutory limit on prepaid rent.
Pennsylvania
Pennsylvania landlords may collect the first month’s rent in addition to the maximum security deposit. During the first year of a tenancy, this may be up to two months’ rent. After the first year of tenancy, the maximum goes down to one month’s rent (PA Stat. § 250.511a(a)(b)).
Rhode Island
In Rhode Island, landlords may collect the first month’s rent in addition to a security deposit capped at 1 month’s rent (R.I. Gen. Laws § 34-18-19(a)). However, if the rental unit includes furnishings with items worth $5,000 or more, landlords may also charge a separate furniture security deposit of up to 1 month’s rent (R.I. Gen. Laws § 34-18-19(e)).
South Carolina
South Carolina law does not restrict prepaid rent amounts.
South Dakota
There is no limit under South Dakota law on the amount of rent a tenant may prepay.
Tennessee
Tennessee does not regulate prepaid rent, leaving the amount to be determined through landlord-tenant agreements.
Texas
Texas law places no cap on prepaid rent.
Utah
Utah does not restrict how much rent a landlord may collect in advance.
Vermont
In Vermont, state law does not impose a limit on prepaid rent.
Virginia
Landlords in Virginia may accept any amount of prepaid rent, since state law sets no limit. But if they collect rent beyond the first month in advance, they must deposit those funds into a federally insured escrow account within 5 business days (Va. Code § 55.1-1205).
Washington
Washington does not limit the amount of rent a tenant may prepay. If the deposit plus non-refundable fees are 25% or more of the first month’s rent, and/or one month’s rent collected upfront, the landlord must give the tenant the option of paying in installments (Wash. Rev. Code § 59.18.610(1)-(3)).
Washington, D.C.
D.C. law does not restrict the amount of prepaid rent a landlord may accept.
West Virginia
West Virginia places no statutory limit on prepaid rent.
Wisconsin
In Wisconsin, there is no legal cap on prepaid rent.
Wyoming
Wyoming does not regulate the amount of rent a tenant may prepay.
Tips for Landlords to Stay Compliant and Professional
Collecting first and last month’s rent plus a security deposit can work smoothly when handled transparently. These best practices help protect you and build trust with tenants:
Put everything in writing: List each payment (first month’s rent, last month’s rent, and security deposit) as separate line items in the lease.
Provide receipts: Some states require written receipts for prepayments and deposits. Even if not required, it’s a good business practice.
Use a move-in checklist: Document the property’s condition at the start of the lease to avoid disputes when returning the deposit to the renter.
Follow state timelines: Return deposits and provide itemized deductions within the legal deadline.
Keep funds separate: Store security deposits in a dedicated account, if required by law, and maintain detailed records of all transactions.
Communicate clearly: Let tenants know which payments are refundable and which are not, and outline the conditions under which you make deductions.
Following these steps can help you avoid legal issues, maintain a professional rental process, and foster positive tenant relationships.
