Advance and notice period: how to adjust a tenant's advance fairly

The advance is the one sum of money in a rental that both sides remember differently. It was paid years ago, the rent has probably gone up since, and nobody wrote down what it was meant to cover. Then the tenant gives notice, and the question arrives: how much comes back?

This guide sets out a fair, simple way to handle the advance from move-in to move-out, with worked examples in taka. It isn't legal advice. Your lease and the law come first, and if a lease is unclear or a dispute is serious, talk to a lawyer.

What the advance is, and what it isn't

The advance is money the tenant gives you at the start of the lease, usually a sum equal to one to three months' rent in Dhaka. It exists to protect you against two risks: unpaid rent at the end, and damage beyond normal use.

It is not rent, and it is not yours. You're holding it for the tenant. Until the lease ends, it should sit apart from your income in your records. Treat it as income and your books will be wrong twice: too high the year you received it, and too low the year you hand it back.

A note on the law: the Premises Rent Control Act, 1991 limits how much a landlord may take in advance, to one month's rent. In practice many leases in Dhaka ask for more. If your arrangement differs from the Act, it's worth knowing that before any dispute starts.

Get three things written down at move-in

Almost every argument about the advance comes from something that wasn't written down on day one. Before the tenant moves in, agree and record:

1. The amount of the advance and the date it was paid, with a receipt.
2. What it can be used for: unpaid rent at the end, damage, unpaid bills, or all three.
3. Whether it can be adjusted against the last months' rent during the notice period, and how many months.

Take dated photos of the flat on move-in day: walls, floors, fittings, appliances, the meter readings. Share them with the tenant. Photos taken the day they move in are the only fair way to tell damage from wear later.

Notice period: what the lease says

Most Dhaka leases ask for one to three months' notice from either side, two months being common. During the notice period the lease continues as normal: the tenant lives there and owes rent for those months.

Record the date notice was given. The lease ends when the notice period runs out, counted from that date. If notice is given on 15 August with two months' notice, the tenant can leave on 15 October, and October is the last month of rent.

Adjusting the advance against the last months

A very common arrangement: "the advance will be adjusted against the final months' rent". It works well when it's done month by month rather than as a lump sum at the end.

Example 1: advance covers the notice months exactly

• Rent: ৳25,000 a month
• Advance held: ৳50,000
• Notice given 1 August, two months' notice, so the lease ends 30 September

In August and September the tenant pays nothing in cash. Each month you record ৳25,000 of rent paid from the advance. After September the advance is fully used. If the flat is in the condition it was let in, there's nothing to refund and nothing owed.

Recording it month by month matters. It shows the rent as income in the months it was used, and your "advance held" figure falls to zero at the right time.

When the rent has gone up since move-in

The advance was paid at the old rent, and the rent has gone up since. Adjust in taka, not in months.

Example 2: rent increased

• Advance paid in 2023: ৳40,000 (two months at the old ৳20,000)
• Rent now: ৳24,000
• Notice months: two, so ৳48,000 is due

The advance covers ৳40,000 of the ৳48,000. The tenant pays the remaining ৳8,000 in cash. Saying "the advance covers two months" when it no longer does is where many disagreements start. Work it out in taka and show the sum.

Deductions: what's fair to keep

At move-out, walk through the flat with the tenant and compare it with the move-in photos. Fair deductions are for things beyond normal use:

• broken fittings, doors, tiles or glass
• holes in walls beyond a few picture hooks
• appliances you provided that were damaged
• unpaid bills in the tenant's name that fall to you
• a proper clean, if the flat is left very dirty

Not fair to deduct:

• paint faded or marked by ordinary living
• wear on floors and door handles from normal use
• repairs that were your job anyway, like an old geyser giving up
• the cost of repainting a flat you'd repaint for any new tenant

For each deduction, write down what it's for and the amount. A receipt from the mistri or shop makes it hard to dispute.

Working out the refund

The order matters. Settle the advance in this sequence:

1. Unpaid rent first, oldest month first, up to the move-out month
2. Deductions next
3. Refund whatever is left to the tenant

Example 3: advance with deductions

Hand over the refund on the day the keys come back, or on a date you agree in writing. Holding it for weeks "until everything's checked" is the fastest way to turn a good tenancy into a bad memory.

When a tenant leaves without notice

Sometimes a tenant leaves early, without giving the notice the lease requires. The lease usually says they owe rent for the notice period anyway.

Example 4: no notice given

• Rent: ৳22,000; two months' notice required
• The tenant leaves on 5 March without notice
• Advance held: ৳44,000

Under a two-month notice clause, rent is owed for March and April: ৳44,000. The advance covers it exactly, so nothing is refunded. If you let the flat again from April, it's fair to charge the departing tenant only for March and refund the rest. You didn't lose April's rent, so don't collect it twice.

When the advance isn't enough

If unpaid rent and deductions are more than the advance, the difference is what the tenant still owes. Show the full calculation, agree a date, and give a receipt when it's paid. Keep the conversation about the numbers, not the person.

Put the settlement on paper

Whatever the outcome, write the settlement down: the advance held, each month of rent paid from it, each deduction with its reason, and the refund or the amount still owed. Both of you sign. Each keeps a copy. A settlement signed on move-out day almost never becomes a dispute later.

How Griho handles it

Griho keeps the advance as Advance held, separate from income, from the day you add the tenant. When notice is recorded, the lease end date is worked out for you. If the lease allows it, you can pay the notice months from the advance, one month at a time. On move-out day, Griho gathers the advance, the unpaid rent and your deductions, applies them in the right order and shows the refund or the balance due. It then produces a settlement PDF in the tenant's language, with signature lines. See Advance, notice period and move-out.

Quick checklist

• Record the advance, its purpose and any adjustment rule at move-in
• Take dated photos of the flat on move-in day and share them
• Record the date notice was given; count the notice period from it
• Adjust the advance month by month, in taka, not in "months"
• Deduct only for damage beyond normal use, with receipts
• Settle in order: unpaid rent, then deductions, then refund
• Refund on move-out day or a written date
• Put the settlement on paper and have both sides sign it