[Direct answer]The payment method of "one month's deposit and three months' advance rent" is legal in itself. The disputes often arise from the amount of the deposit, the conditions for its return, and the settlement of the advance rent, rather than the method itself. Current laws do not prohibit lessors and lessees from agreeing on a one-time payment of three months' rent and separately collecting one month's rent as a deposit. As long as the parties' intentions are genuine, the terms are written into a written contract, and the purpose of the deposit and the conditions for its return are clear, it falls within the scope of the parties' own arrangements. The Contracts Chapter of the Civil Code of the People's Republic of China (effective January 1, 2021) respects such agreements, while setting boundaries on standard clauses, the amount of the deposit, and breach of contract liability. What truly needs to be vigilant against are situations where the deposit is written as non-refundable, the advance rent and the deposit are conflated into one sum, or the payment method of "one month's deposit and three months' advance rent" is used to bundle rental installments and high service fees.

1. Problem background and typical scenarios

The so-called "one month's deposit and three months' advance rent" refers to paying a deposit equivalent to one month's rent at the time of signing the contract, plus three months' advance rent, which together amount to four months' rent. It is commonly used in residential leasing transactions, intermediary signing contracts, and long-term rental apartments, resulting in various combinations such as "one month's deposit and three months' advance rent plus half a year's payment", annual payment discounts, installment payments, service fees, management fees, and separate intermediary fees. The high-risk points of disputes do not lie in the payment method, but in the supporting clauses: failing to review the contract carefully when signing, having the deposit deducted for cleaning fees, wall damage, breach of contract penalties, etc. when moving out; advance rent not being offset against the corresponding lease term month by month; the intermediary failing to transfer the deposit to the property owner as agreed; long-term rental apartments encountering funding problems, with the landlord demanding tenants to move out despite claiming not to have received subsequent rent; and the house itself having mortgage, seizure, co-owners' disagreement or ownership defects, leading to the failure of the contract purpose. The legal nature of the deposit also needs to be clarified: it is a performance guarantee, not a down payment, and the ownership still belongs to the lessee. The landlord cannot confiscate it without justification. Mixing a one-month deposit with three months' advance rent into a single transfer and only writing "rent" in the remarks section is the most likely to cause confusion during settlement. Combined with the review habits in the real estate sales and construction engineering fields, the ownership of the property, the status of the mortgage and seizure, and whether the house meets the conditions for safe delivery should also be included before signing the contract. Legal payment methods do not guarantee performance ability.

II. Key points of contention

The disputes focus on five aspects. Firstly, whether the "one-month deposit and three-month advance payment" violates rent management or local housing leasing regulations. The conclusion is usually that the agreement itself is not illegal, but some localities have regulatory requirements on deposit caps, advance payment periods, and installment payments, which need to be verified according to local rules. Secondly, the difference between deposits and earnest money: agreements stipulating that deposits are non-refundable generally do not apply to earnest money penalties. Thirdly, the obligation to provide clear explanations of standard clauses: whether clauses in standard contracts provided by landlords or agents that increase tenants' responsibilities and exclude their main rights are prominently highlighted and included in the contract. Fourthly, which lease period the three-month advance payment corresponds to, how it is offset on a monthly basis, and whether unused portions can be refunded in the event of early termination. Fifthly, when issues such as housing ownership, mortgage seizures, illegal group renting, and quality and fire safety issues in new or renovated buildings affect the living environment, the legality of the payment method is reviewed together with the contractor's ability to fulfill its obligations. Both parties' arguments also focus on these aspects: tenants argue that paying four months in advance is too much pressure, that clauses were not clearly explained, and that there is no basis for deducting fees when tenants move out; landlords or agents argue that this is an industry practice, that the contract has been signed, and that the deposit is used to guarantee the house and settle expenses. When handling disputes, the court usually first reviews the contract text and payment receipts, then checks whether the clauses are standard clauses and have been clearly explained, and finally verifies the purpose of the deposit and the basis for deductions, and finally settles the dispute according to actual losses and contractual provisions.

III. Professional analysis by Hengluo Lawyers

Breaking down the review into five layers will make the conclusions clearer. **First layer: Boundaries of autonomy of contractual will**: The Contract Chapter of the Civil Code allows parties to freely stipulate the term and method of rent payment. The deposit is considered an atypical guarantee, which should be handled according to the contractual provisions. If the agreement is unclear, it should be interpreted in accordance with the contract terms and transaction practices. **Second layer: Validity of clauses**: Provisions in standard contracts such as "deposits are non-refundable", "advanced rent payments are non-refundable", "the landlord can enter the property at any time", and "unilateral rent increases" must be reviewed to ensure they are prominently disclosed, do not unreasonably exempt the landlord from liability or impose additional obligations on the tenant, and do not preclude the tenant's main rights. If no such disclosures are provided, the tenant may claim that the corresponding provisions do not constitute part of the contract. **Third layer: Payment structure**: Separately list deposits, prepaid rent, service fees, agency fees, and utility deposits. Verify that the payment recipient is the property owner or an authorized agent, and require separate receipts indicating the corresponding lease term. Single transfers with vague descriptions make it difficult to recover funds upon termination. **Fourth layer: Property ownership and performance capability**: Before signing, verify the property ownership, co-ownership status, mortgage and seizure status. The registration inquiry system established by the *Interim Regulations on Real Estate Registration* (effective March 1, 2015) can be used for verification. The *Urban Real Estate Management Law of the People's Republic of China* (amended on August 26, 2019) regarding real estate transactions and ownership management requires caution in paying for properties with legal defects. For newly built or renovated properties, the construction quality and completion inspections regulated by the *Building Law of the People's Republic of China* (amended on April 23, 2019) determine whether the property meets safety delivery conditions. Additionally, clarify the scope of applicable regulations. The *Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Commercial Housing Sales Contract Disputes* (amended in 2020) applies to sales relationships, while the determination of rental deposits should still follow the Contract Chapter of the Civil Code and cannot be conflated. **Fifth layer: Logic of determination**: First review the contract and payment receipts, then check whether the standard clauses provide sufficient disclosures and whether the deposit's purpose is clearly defined. Finally, verify whether the deduction items have supporting documentation and compare them with historical records to calculate actual losses.

IV. Practical suggestions and legal basis

It is recommended to proceed in eight steps. First, verify the identity certificates of the property owners, the real estate ownership certificates, the consent and authorization letters of the co-owners, and check the mortgage and seizure status with the registration channels before signing the contract. Second, include the deposit, three-month advance rent, service fees, and agency fees in the main body or annex of the contract, and attach the payment account and the corresponding rental periods of each payment. Third, specify the amount of the deposit, the purpose of the guarantee, the items that can be deducted, and the time limit for returning the deposit in the deposit clause. Fourth, specify the start and end dates of the corresponding rental periods and the order of monthly offsetting in the advance rent clause. Fifth, read the standard contract article by article, and require oral and written explanations of the bolded exemption clauses, keeping the communication records; do not sign blank contracts, and do not transfer funds to personal accounts unrelated to the contract. Sixth, make a settlement list when handing over the house, copy the initial readings of the water, electricity, and gas meters, and take photos to preserve the current state of the house. Seventh, first negotiate disputes and keep written settlement documents. If no agreement is reached, mediation may be applied for. Eighth, if necessary, file a lawsuit with the people's court with jurisdiction in accordance with the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021 and implemented on January 1, 2024), and the request for return is generally subject to the three-year statute of limitations stipulated in the Civil Code. The normative basis also includes the Interim Regulations on Real Estate Registration, the Urban Real Estate Management Law, and the Construction Law. This firmThe real estate sales and construction project services sectorIt includes a list of ownership verification and itemized payment details, which can be used for reference when preparing the necessary documents.

5. Henglu Law Firm's Advice

There are three points that deserve special attention. Specifically: 1. **Don’t mix the security deposit with the prepaid rent into a single transfer**. The nature, amount, and corresponding lease period of each payment must match those specified in the contract and receipts. This is the basis for settlement upon moving out. 2. **Keep receipts**: Clearly mark the rent and security deposit for each lease period in the transfer notes. Request separate receipts and store the settlement list and photos of the initial balance. The more detailed the documentation, the less room there is for unilateral deductions. 3. ** Verify ownership**: Be cautious about overly favorable payment methods when there are outstanding mortgages, seizures, unapproved co-owners, or unsafe delivery conditions for the property. Legal payment methods don’t guarantee contractual obligations will be fulfilled. 4. **Two legal boundaries**: - Don’t sign blank supplementary clauses or those with clauses stating "no refunds for security deposits." Demand clear explanations. - Don’t blindly accept claims that "one-month deposit, three-month rent" is illegal and use this as grounds to refuse full payment. Such judgments must align with contractual provisions and local regulations. The Civil Code and the Urban Real Estate Management Law jointly define these boundaries. It’s safer to conduct written agreements and ownership verification before payment rather than attempting recovery afterward.

VI. Frequently Asked Questions

Q1: The contract stipulates that the tenant pays one month's rent as a deposit and three months' rent as the first installment. Is it against the rules for the landlord to collect four months' rent at once?

Generally, this is not considered a violation of regulations, provided that both parties have reached a genuine agreement and the nature of the payment and the corresponding lease period are clearly stated. According to the Civil Code of the People's Republic of China (effective January 1, 2021), the contract section allows parties to freely stipulate the payment terms and methods of the rent. Prepaying three months' rent and collecting an additional one-month deposit is a common commercial arrangement, and the law does not prohibit such practices. What really affects the judgment are three aspects: whether the deposit is stipulated as non-refundable; whether the prepaid rent clearly corresponds to a specific lease period; and whether there are undisclosed standard clauses that impose additional responsibilities on the lessee. Some localities also have regulatory requirements regarding the prepayment cycle of housing rent, the maximum amount of deposits, or the installment payment of rent. Therefore, it is necessary to verify the local current rules and not just rely on the signed contract.

Q2: If the transfer note only mentions the rent, which receipt should I provide for the deposit part?

It is necessary to provide a document that can independently correspond to the deposit, otherwise, it will be the most difficult to clarify this amount when checking out. The list of materials includes: a receipt or electronic receipt stating the deposit amount and purpose, a contract appendix specifying the deposit usage and return conditions, the payment and recipient information on the bank transfer statement, a receipt account statement consistent with the property owner's, a power of attorney and transfer certificate when the deposit is collected by an intermediary, and a settlement list and photos of the utility meter readings at the time of moving in. It is recommended to transfer the deposit, three months' advance rent, and service fees in three separate payments with separate notes, or to specify the nature of each payment and the corresponding lease period in the contract.

Q3: When verifying the lease terms, should I hire a lawyer to review the contract? Is the fee calculated based on the total lease amount or the annual lease amount?

For non-litigation matters such as contract review, fees are typically charged on a per-item or per-hour basis, rather than as a percentage of the annual rent. The fee structure should be differentiated: single contract review, clause amendment, and attending signing sessions are usually fixed fees or charged by the hour; if the dispute later escalates to issues such as deposit refunds or recovery of prepaid rent, fees are often negotiated based on the value of the dispute or charged in stages. Regardless of the method, the specific amounts are specified in the written engagement contract, and there are no unified government-set pricing standards. Before taking action, it's advisable to first calculate whether the potential recovery amount is commensurate with the costs involved. Disputes involving a one-month deposit and three-month rent are typically limited in scope, so it's advisable to prioritize reviewing contracts on a per-item basis and only hire legal representation when necessary.

Q4: After the "one-month deposit and three-month rent" payment method is deemed illegal, how long is the timeframe for suing to recover the overpaid amounts?

Generally, the statute of limitations for litigation is three years, starting from the date when the right holder knows or should have known that his rights have been infringed and the obligee's obligations have been breached. According to the Civil Code of the People's Republic of China (effective January 1, 2021), the statute of limitations for requesting protection of civil rights from the people's court is usually three years. Claims for the return of rental deposits and prepaid rents are generally handled according to this principle. The statute of limitations may be interrupted by the right holder's request for performance to the obligee, the obligee's consent to performance, the initiation of litigation or arbitration, and the statute of limitations will be recalculated from the date of interruption or the conclusion of the relevant procedures. Therefore, it is necessary to keep the evidence of collection letters, chat records, and mediation applications; and to record the time of consultation, mediation, and reporting to the competent authorities. Do not let the statute of limitations expire during repeated communication.

Q5: Should the lessor list the deposit and the first-month's rent separately in two payments before signing the contract?

It is necessary to list the items separately before making the payment, which is the step with the lowest cost and the highest return on the day of signing the contract. The following tasks can be carried out on the same day: require the contract text or annexes to list the deposit amount and return conditions, the amount of prepaid rent and the corresponding start and end dates of the lease term, the amount of service fees and agency fees and the entity collecting them; check whether the name of the receiving account is consistent with the rights holder of the real estate ownership certificate. If not, request a power of attorney; verify the ownership and mortgage status through the registration information query channels established in accordance with the "Interim Regulations on Real Estate Registration" (effective March 1, 2015); for the bolded clauses in the standard contract, such as "the deposit will not be refunded" and "the paid rent will not be refunded in case of early termination of the contract", require a detailed explanation and inclusion in the supplementary agreement; and prepare a settlement list and record the readings of water, electricity and gas meters at the time of handover.

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in time.