What Does Rent Abatement Mean?

What Does Rent Abatement Mean?
Rent abatement means reducing the rent of a house/property due to a part of the property being in an unusable condition. Buzzle will tell you all about what a rent abatement means.
Attention!
If the insurance company does not cover the entire damage amount, the landlord may very well terminate the lease. This is because he is at a loss from both the sides - he has to pay for the repair as well as reduce the rent.

When a property is out for a periodic lease or for a sale, site inspection is one of the primary points that clients take care of. If the property is destroyed in some way or the other (minor), it is generally rejected. For that matter, if there is a problem, like a rat infestation or plumbing, the owner himself will be in agreement to bargain for a lesser rent. However, if such problems were already present but were found out after the rental agreement was signed, the tenant can reduce some rent amount to compensate for the inconvenience he has faced. This is called rent abatement. The paragraphs below elaborate on this concept and its related terms.

An Overview
  • The rent abatement definition states that a certain percentage of the rent can be reduced by the law, if a flaw is found on the property.
  • That is to say, if the property is less useful to the tenant than bargained for, he has a legal right to claim for some abatement in the rent amount.
  • The amount that is reduced generally equates to the percentage of property that is spoiled or affected.
  • This situation may also arise in case a storm/hurricane/flood/fire or any natural calamity/accident takes place and the house is partially/completely destroyed in the process.
  • The owner will reduce/cancel the rent until the time that the flaw is repaired and the tenant is able to lead a hassle-free life.
Considerations
  • A rent abatement clause is generally inserted on the lease agreement.
  • The clause states that if the property damage is natural or caused by the owner himself, the tenant can qualify for a stipulated rent reduction until the property is repaired.
  • If, however, the damage is caused by the tenant, the clause is nullified. The tenant should not be at fault for any damage.
  • Rent can also be reduced in case of non-payment of utilities, not conducting repairs, etc.
Mutual Benefits
  • Ideally, the rent abatement clause benefits both - the owner and tenant.
  • The owner's property is ideally under liability insurance. Therefore, any damage that occurs in case of natural calamities is covered (as long as the deductibles are being paid).
  • At the same time, the tenant's personal properties are also under coverage; thus, any private assets are insured in case of damage.
  • Sometimes, the tenant and the landlord may both need the relationship to continue as it is, i.e., the tenant may be in such a situation that he may be able to pay lesser rent; at the same time, the landlord may continue generating income instead of the property lying vacant.
Legalities
  • To qualify for abatement, the tenant must inform the owner about the property destruction in writing.
  • If the property is repaired within 90 days (rent abatement period) of notifying the owner, partial rent abatement comes into picture. If not, the lease is likely to be canceled.
  • You have to file a lawsuit to set the abatement process in motion.
  • There is a stipulated amount, lesser than which can be claimed in a smaller court. If it exceeds the limit, you will need an attorney.
  • In case you are in a situation where your landlord sues you for back rent, you can use the abatement clause as a defense.
  • Make sure you have photographs of the property damage as evidence. You will need to prove that the repairs weren't conducted even after a written notification.
  • As a legal consideration, risk acknowledgement is required as well. The landlord cannot force the tenant to pay rent for an unusable property, and the tenant may terminate the lease and shift to a better property. At the same time, if the damage loss is not covered by the insurance company, the landlord may be forced to pay additional amount in court. That is why a rent abatement is beneficial.
Calculation
  • You must know how to calculate rent abatement in case you are in a similar situation.
  • First and foremost, calculate the percentage of damage that has occurred.
  • For example, if half of the apartment is unusable, you are entitled to a 50% rent abatement. If the plumbing/leaking/electricity problems reduce the usability of your apartment by 25%, you will receive a 25% waiver in the rent.
  • The calculation depends a great deal on what comforts you are entitled to, i.e., what you bargained for and what you are receiving currently.
  • For example, in case you were promised an air vent installation and a dehumidifier, and they have been destroyed (due to whatever reason), you can claim for a percentage of rent that equates to a percentage of the loss you have faced due to the destruction of the two assets mentioned above.
Rent abatement does not equate to free rent. In case the owner announces a few calendar months as rent-free, beware, as the amount is compensated in the other months. The rent abatement option, thus, helps you formulate expense strategies while benefiting both the involved parties.