Landlord’s Accounting Methods

Should You be Wary of Your Landlord’s Accounting Methods?

Businesses are expected to keep clear accounting records both for tax purposes and in the event a dispute arises regarding payments from clients or customers. Landlords are no exception, as landlords should always keep an organized, updated, and accurate ledger of all rent payments received from tenants. If a dispute occurs over rent that was paid or unpaid, the ledger can hopefully help resolve the matter. If a landlord files a claim for eviction and unpaid rent, the ledger can serve as important evidence against the tenant.

On the other hand, a tenant always has the right to present evidence to defend against claims of unpaid rent. Receipts, processed checks, and bank statements can be used to show they paid rent in certain months. However, if a landlord uses unexpected accounting methods, defending against unpaid rent claims can be confusing and difficult. You need an attorney on your side who can examine your landlord’s accounting methods and approach your defense in your case accordingly.

It should seem obvious that, if you paid rent in June, your landlord should record that you paid rent in June. However, a popular accounting method used by many businesses, referred to as “First In, First Out” (FIFO) is often utilized. Under this method, a landlord may apply rent payments to earlier balances if rent had been missed in previous months. For example, consider the following situation:

  • You missed rent payments in April and May;
  • You paid rent in both June and July;
  • Your landlord applied your payments to your balances from April and May;
  • The ledger shows you paid in April and May, but there are no payments recorded for June and July.

In the above scenario, if your landlord files a claim against you, you will likely show up with receipts or bank statements showing your June and July payments. However, these do not coincide with the actual months in which you failed to pay rent, so defending against a claim can be complex. Fortunately, your attorney can make arguments to have the claim against you corrected so that you can adequately defend against the claims.

Call 201-498-9768 Today for More Information About How We Can Help You

At the Law Office of John L. Schettino, we understand that landlord accounting methods can be confusing and can make it difficult for a tenant to defend against claims of unpaid rent. We also know the importance of proper landlord accounting records and that, without such proof, an eviction should not be granted. If you need help from an experienced New Jersey landlord tenant attorney, please call for a free consultation today.