If the circumstances warrant it, a tenant may request a free rent period from the landlord by executing a Rent Abatement Agreement.
The abatement period traditionally takes place during the first few months of the lease term. Rent Abatement Agreements are also used in situations when the rental premises are temporarily unavailable. Landlords may even agree to rent abatement if tenants run into financial hardship through no fault of their own.
A landlord and a tenant can execute a Rent Abatement Agreement whereby the landlord nullifies rent for a predefined period. After that period, the tenant will continue to pay the rent as prescribed in the lease agreement unless the abatement agreement is extended.
Depending on your state, a Rent Abatement Agreement may also be known as:
Free Rent Agreement
Rent Free Period Agreement
A Rent Abatement Agreement may be in order if a tenant encounters unforeseen circumstances that result in an inability to meet rent payments. These may include the COVID-19 pandemic, natural disasters, or other hardship events usually not brought upon by the tenant’s fault.
Landlords and tenants can agree about the period of rent abatement, which usually spans several months and protracts in a new agreement.
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To create your document, please provide:
Date: The date when the Rent Abatement Agreement is to be executed.
Personal information: Full names and addresses of both parties in the agreement (the landlord and the tenant).
Leasing property information: The address and description of the property in the lease agreement.
Rent Abatement Period: Define when the rent-free period begins and ends.
Monthly rental rate: Rental rate to resume after the end of the rent abatement period.
Landlord: In the context of a Rent Abatement Agreement, this is the property owner in the lease agreement for which the rent is to be abated.
Tenant: In the context of a Rent Abatement Agreement, this is the party who leases the property in the lease agreement for a rental rate specified within.
Residential Lease Agreement: The contract defining the landlord-tenant relationship for a residential property, as opposed to a commercial lease agreement for a commercial (business) property.
The Rent Abatement Agreement needs to be signed by both the landlord and the tenant, who are the same individuals described in the lease agreement.
Once the document is printed and signed, both the tenant and landlord should keep a copy in their archives. The landlord may ask for additional documents, including the financials of the tenant. For example, a business tenant may be forced to temporarily close his business premises by the franchise, the governor, or the local city council. In this case, the landlord may be amenable to a Rent Abatement Agreement if the tenant could supply proof of closure enforcement and if they had been a good tenant before the hardship event.
Both rent abatement and rent deferral are a type of relief for the tenant, but there is a crucial difference. Rent abatement is a time-limited free-rent concession. A landlord might use a free rent period as an incentive for a tenant to sign a longer contract.
A Rent Abatement Agreement can also be negotiated if a business tenant is unable to operate because of government orders or something else through no fault of their own (the COVID-19 pandemic stay-at-home orders, for example).In contrast, a rent deferral is a postponement of rent payments.
During the rent deferment period, the tenant will not be required to pay rent as defined in the agreement. After that period, the tenant will have to make up for the rent deferred plus interests if required by the landlord. Both rent abatement and rent deferment can be partial (for example, 50%) or total (100%).
While the signing of the Rent Abatement Agreement is a formality, landlords should ask for:
Start with the following:
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