Prepay Rent?

Earlier today I had a discussion with a friend who is planning to move later this spring. Her & her husband are going to try to negotiate a lower monthly rent amount, and are going to offer to prepay a significant amount (6-12 months) if the landlord or management company will agree to reduce the payment by about $100/mo (roughly 15%).

I think this is a really bad idea; it seems like they would be putting themselves at significant risk with little room for recourse if something bad happened. When I pointed that out, they didn't seem to think it was a problem (or even a real risk). Some specific scenarios that would concern me:

- The building catches fire and is damaged or destroyed. Renters insurance only covers the contents, so although the owner would likely have insurance to rebuild, they would need to find another place to stay (and it takes time for insurance claims to get processed). The insurance won't refund prepaid rent, so they would need to get that back from the landlord (possibly by filing suit, if things turn sour).

- The building has plumbing or mechanical problems (a pipe freezes then bursts, or the boiler/furnace goes out for several days, etc.) and the building or their apartment unit becomes uninhabitable, they have to trust that the landlord will take care of it expeditiously.

- If any repairs are necessary and the landlord isn't responsive, they have no real recourse to make sure the repairs get done. Typically, tenants are legally allowed to hire someone to make repairs (if the landlord doesn't take care of necessary repairs in a timely manner), and then deduct the cost of the repairs (with receipt) from their rent payment. Since they'll have already paid, there's nothing they can do except wait or pay out of pocket.

- The biggest concern, if the owner gets into financial trouble and can no longer afford to pay his mortgage. They will have prepaid the rent, but if the landlord stops paying and is foreclosed on or sells to someone else, all they have is a piece of paper saying that they've paid. The new owner may not want to honor that contract, and could make life very difficult and unpleasant for them (which could also go back to the repairs/maintenance thing too). I think, technically, the contract would still be valid, but they may have to go to court (which means attorney & court fees) to have it upheld. And if they tried to recover any of that prepaid rent from the owner, they would likely just be one of many lien holders (that would go away if he/she declared bankruptcy).

How much is too much?

Hubby & I have been talking through plans for the next year or two. Not surprisingly, we aren't really on the same page.

I want to pay off the credit card debt, then aggressively tackle our 2nd mortgage. While we're working on that, I'd also like to cashflow several home renovation projects.

He has his eyes on a brand-new $38,000 sports car (financed, not saving up for a few years to buy it with cash). In the meantime, he's planning to buy some new electronics and go on a few trips.

I'm not sure that there's any middle ground that we can both agree on. I think one or both of us will end up not getting what we want.