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FIFO Methods and Landlords

For tenants and landlords who are constantly struggling with late payments of rent, one of the most common issues that can be quite the hurdle is the ‘first in, first out’ method, or FIFO, used by many areas of American business. However, this was recently halted by the State Supreme Court’s ruling that eviction complaints need to be formatted in a specific way which details the unpaid rent payments in detail, and helps to eliminate some of the confusion associated with the FIFO method of accounting.

This is how it works: If a tenant misses payments for two months, but makes them up later, the missing payments would then be counted as the current months for which he is paying, as the money will be credited to the earlier months rather than the most recent. If it comes down to eviction, depending on how the paperwork was recorded under FIFO, it would look like the tenant had missed the past two month’s payments, even though he had actually paid those, but they counted as late payments instead for earlier in the year. So while the tenant’s payments hadn’t been delayed most recently, that is what it would look like on paper, and cause quite a few difficulties in court with discrepancies of their receipts in hand.

These cases got particularly complicated when the tenant would argue that they had no idea of knowing which months’ rent was owed, and could not provide the receipts in their defense in trial. The complaints should be drafted in a way to show which payments were missed, and provide the tenant again with ample opportunity to make up the missed payments in a reasonable period of time. As in all cases, it is important for both tenants and landlords to provide up to date and accurate records of payments and missed payments, to provide as solid evidence in the case. It is also important to make copies of these ledgers in the eviction complaint for the landlords.

Landlord and tenant relationships are often tenuous at best, and they can quickly get nasty when questions of missed rent come up. If landlord’s accounting practices are difficult to understand or outdated, such as in cases of the first in, first out method, this can only exacerbate the problems. Marking fees clearly as well as the dates for which payments were missed or made, even if late, is crucial in navigating these type of rent payment disputes across the board.

If you are a tenant struggling to pay your rent, or a landlord fighting with a tenant over late bills, it is important to have an experienced attorney to counsel you throughout the process. For more information about the services I provide in this arena, call me, John Schettino, today for a free consultation at 201-498-9768.

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