Tap to get financing
Apartment Loans
Fannie Mae
Fannie MaeMultifamily Small Loan ProgramFannie Mae DUS Loans
Freddie Mac
Freddie MacSmall Balance LoansAffordable Housing Express Loans
FHA/HUD
HUD LEAN Loan ProcessingHUD 232/223(a)(7) Refinancing LoansHUD 232/223(f) LoansHUD 241(a) Supplemental LoansHUD 232 LoansHUD 223(a)(7) Refinancing LoanHUD 223(f) LoansHUD 221(d)(4) LoansHUD Apartment Loans
Non-agency
Life Company Apartment LoansHard Money Apartment LoansApartment Bridge LoansMezzanine FinancingSmall Apartment LoansBank LoansConstruction LoansCMBS Loans
Learn
BlogYield Maintenance CalculatorLoan Repayment CalculatorNOI CalculatorGross Rent Multiplier CalculatorDebt Service Coverage Ratio (DSCR) CalculatorDebt Yield CalculatorCash on Cash Return CalculatorCap Rate CalculatorBreak Even Ratio CalculatorApartment Mortgage CalculatorLoan To Value and Loan To Cost RatiosApartment Finance Due Diligence ResourcesHow to Purchase an Apartment Property
About us
TeamLeadership
(561) 556-9997 Get financing →
Newly Published
Nov 1 at Apartment Loans
What is Conduit Financing?
Sep 9 at Apartment Loans
Operating Expense Ratio Explained
Jul 1 at Apartment Loans
Real Estate Mutual Funds
Explore the Janover Network
May 22 at Multifamily Loans
Multifamily Minute Reader Reflections: What's the Most Important Part of Your Financing?
May 19 at SBA 7(a) Loans
Busting 5 SBA 7(a) Loan Myths
May 19 at SBA Express Loans
Top 5 Reasons to Get an SBA Express Loan in 2023
Was This Article Helpful?
Apartment Loans Secrets
Last updated on Feb 19, 2023
2 min read
by Content Team

Rent Abatement Explained

In this article:
  1. What is Rent Abatement?
  2. Rent Abatements vs. Rent Concessions
  3. Related Questions
  4. Get Financing
Start Your Application and Unlock the Power of Choice Experience expert guidance, competitive options, and unparalleled industry expertise.
Click Here to Get Quotes →
$5.6M offered by a Bank at 6.1%$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1.4M offered by a Credit Union at 6.1%Click Here to Get Quotes!

What is Rent Abatement?

It is quite common for apartment or multifamily leases to include rent abatement clauses. A rent abatement clause is a special provision in a lease agreement that allows tenants a period of time in which they do not have to pay their rent or must only pay a fraction of their rent. The activation of such a provision is typically contingent on the property becoming uninhabitable for any number of reasons.

A good portion of the time, rent abatements are granted due to damages caused by natural disasters such as hurricanes, tornados, fires, or floods. As a matter of fact, some states often require that rent abatement clauses be included in lease agreements due to the sheer likelihood of such an event occurring. Still, there are also cases where a lease agreement doesn’t include a rent abatement clause — nor is it required to — and is instead requested by a tenant due to unforeseen circumstances.

Regardless of the reason behind it, once a rent abatement has been granted, the unpaid rent (or the amount left over if only a portion was paid) is either taken on and paid directly by the landlord, or is paid by the relevant liability insurance — which is often the more likely of the two. In many cases, if a landlord does not repair damages to the property in a timely manner, the tenant may be entitled to a rent abatement for the full costs of the repairs to the property. Sometimes, if a tenant is displaced as a result of an uninhabitable property, rent abatements also cover the costs of temporary housing, including the costs of staying in a hotel, motel, or short-term rental during the repair period of the property.

Rent Abatements vs. Rent Concessions

Rent abatements are often confused with rent concessions. Unlike rent abatements, however, rent concessions are typically granted to tenants at the beginning of a lease to cover the period in which the property is being built or customized to meet the tenant’s specifications. Rent concessions are also used as incentives to entice tenants to sign or renew leases. Often, a landlord will offer rent concessions in the form of a free month’s rent or reduced rent for a set period of time to attract new tenancy. Rent abatements, in contrast, exist as a means of aid for tenants during difficult situations.

Related Questions

What is rent abatement?

Rent abatement is a special provision in a lease agreement that allows tenants a period of time in which they do not have to pay their rent or must only pay a fraction of their rent. The activation of such a provision is typically contingent on the property becoming uninhabitable for any number of reasons. A good portion of the time, rent abatements are granted due to damages caused by natural disasters such as hurricanes, tornados, fires, or floods. As a matter of fact, some states often require that rent abatement clauses be included in lease agreements due to the sheer likelihood of such an event occurring. Still, there are also cases where a lease agreement doesn’t include a rent abatement clause — nor is it required to — and is instead requested by a tenant due to unforeseen circumstances.

Once a rent abatement has been granted, the unpaid rent (or the amount left over if only a portion was paid) is either taken on and paid directly by the landlord, or is paid by the relevant liability insurance — which is often the more likely of the two. In many cases, if a landlord does not repair damages to the property in a timely manner, the tenant may be entitled to a rent abatement for the full costs of the repairs to the property. Sometimes, if a tenant is displaced as a result of an uninhabitable property, rent abatements also cover the costs of temporary housing, including the costs of staying in a hotel, motel, or short-term rental during the repair period of the property.

How does rent abatement work?

Rent abatement is a special provision in a lease agreement that allows tenants a period of time in which they do not have to pay their rent or must only pay a fraction of their rent. The activation of such a provision is typically contingent on the property becoming uninhabitable for any number of reasons. This is often due to damages caused by natural disasters such as hurricanes, tornados, fires, or floods. In many cases, if a landlord does not repair damages to the property in a timely manner, the tenant may be entitled to a rent abatement for the full costs of the repairs to the property. Sometimes, if a tenant is displaced as a result of an uninhabitable property, rent abatements also cover the costs of temporary housing, including the costs of staying in a hotel, motel, or short-term rental during the repair period of the property.

Sources:

  • Apartment.loans: Rent Abatement Explained
  • Multifamily.loans

What are the benefits of rent abatement?

The benefits of rent abatement are that it allows tenants a period of time in which they do not have to pay their rent or must only pay a fraction of their rent. This is typically contingent on the property becoming uninhabitable for any number of reasons, such as damages caused by natural disasters. In many cases, if a landlord does not repair damages to the property in a timely manner, the tenant may be entitled to a rent abatement for the full costs of the repairs to the property. Sometimes, if a tenant is displaced as a result of an uninhabitable property, rent abatements also cover the costs of temporary housing, including the costs of staying in a hotel, motel, or short-term rental during the repair period of the property.

Sources:

  • Apartment.loans: Rent Abatement Explained
  • Multifamily.loans

What are the drawbacks of rent abatement?

The main drawback of rent abatement is that it can be difficult to determine when it should be granted. In some cases, landlords may be reluctant to grant rent abatements due to the potential financial losses they may incur. Additionally, if a tenant is granted a rent abatement, they may be required to pay back the amount of rent that was abated at a later date. This can be difficult for tenants who are already struggling financially. Finally, rent abatements may not cover the full costs of repairs or temporary housing, leaving tenants to cover the remaining costs.

What are the best strategies for negotiating rent abatement?

The best strategies for negotiating rent abatement depend on the situation. Generally, it is important to be aware of the laws in your area, as some states may require rent abatement clauses in lease agreements. Additionally, it is important to be aware of the landlord's liability insurance, as this may cover the costs of rent abatement in the event of damages to the property. It is also important to be aware of the landlord's timeline for repairs, as this may affect the amount of rent abatement that is granted. Finally, it is important to be aware of any temporary housing costs that may be incurred as a result of the property becoming uninhabitable, as these costs may also be covered by rent abatement.

For more information, please see the following sources:

  • What is Rent Abatement?
  • Multifamily Loans
In this article:
  1. What is Rent Abatement?
  2. Rent Abatements vs. Rent Concessions
  3. Related Questions
  4. Get Financing
Tags
  • Landlord
  • Apartment Property Owner
  • Apartment Investing
  • Apartment Finance
  • Apartment Loans
  • Multifamily Owner

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

Apartment Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487
(561) 556-9997 

hello@apartment.loans

Loan Types

Bank Loans
CMBS
Construction Loans
Fannie Mae
Freddie Mac
HUD/FHA Apartment Loans
Commercial Loan Rates

Site Information

Privacy Policy
Terms of Use

This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

Copyright © 2023 Janover Inc. All rights reserved.