Rent abatement
Rent abatement is a period in which a tenant pays reduced rent or no rent while the lease continues. It is either negotiated upfront as an incentive, often in commercial leases, or triggered when the premises cannot be used, for example after a fire or a landlord's failure to make repairs.
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Sample Rent abatement clauses
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Retrophin, Inc. (RTRX)Expansion Premises Base Rent Abatement. Provided that no event of default occurs during the seven (7) month period commencing on the first (1st) day of the first (1st) full calendar month of the Suite 525 Expansion Term and ending on the last day of the seventh (7th) full calendar month of the Suite 525 Expansion Term (the “Suite 525 Base Rent Abatement Period”), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the Suite 525 Premises during such Suite 525 Base Rent Abatement Period (the “Suite 525 Base Rent Abatement”).
Additional Rent Abatement. Additional Rent for the ROFR Space shall be abated in its entirety from the Effective Date through January 28, 2023. Tenant’s obligation to otherwise pay Additional Rent under the Original Lease and as to the Original Premises shall not be affected.
Base Rent Abatement. The Base Rent Abatement set forth in Section 7.5 of the Lease shall not apply to the Extension Term. Provided that Tenant is not in monetary default (without reference to any notice or cure periods) or material non-monetary default (beyond applicable notice and cure periods) under the Lease, Landlord agrees to abate Tenant’s obligation to pay Base Rent for the Premises for the first two (2) months of the Extension Term (the “Extension Term Base Rent Abatement”). The period of time in which Tenant is entitled to any Extension Term Base Rent Abatement shall be referred to herein as the “Extension Term Base Rent Abatement Period.” During the Extension Term Base Rent Abatement Period, Tenant will remain responsible for the payment of the Property Management Fee (which shall be calculated as if there were no Extension Term Base Rent Abatement and Tenant were paying Base Rent of $44,484.00 per month), utilities, Tenant’s Adjusted Share of Operating Expenses and all Additional Rent attributable to the Premises. Tenant acknowledges and agrees that the foregoing Extension Term Base Rent Abatement has been granted to Tenant as additional consideration for entering into this Amendment, and for agreeing to pay the Base Rent and perform the terms and conditions otherwise required under the Lease. If Tenant shall be in monetary default (without reference to any notice or cure periods) or material non-monetary default (beyond applicable notice and cure periods) under the Lease, then Tenant’s right to receive the Extension Term Base Rent Abatement for the Extension Term Base Rent Abatement Period shall automatically terminate and Tenant shall immediately be obligated to begin paying Base Rent for the Premises in full. The Extension Term Base Rent Abatement shall be personal to the original Tenant and any Tenant’s Affiliate that assumes the original Tenant’s interest in the Lease pursuant to an Exempt Transfer and shall only apply to the extent that the original Tenant or a Tenant’s Affiliate that assumes the original Tenant’s interest in the Lease pursuant to an Exempt Transfer (and not any assignee, or any sublessee or other transferee of the original Tenant’s interest in this Lease pursuant to a Transfer that is not an Exempt Transfer) is the Tenant under this Lease during the Extension Term Base Rent Abatement Period.
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GUESS INC (GES)Rent Abatement. Tenant shall be entitled to receive an abatement of Minimum Rent otherwise payable to Landlord for the first three (3) months of the Renewal Term (the “Rent Abatement”). Tenant acknowledges and agrees that the foregoing Rent Abatement has been granted to Tenant as additional consideration for entering into this Fourth Amendment, and for agreeing to pay the rental and performing all of the terms and conditions otherwise required under the Lease. Tenant shall not be entitled to abatement of any other amounts due under the Lease except as expressly set forth herein, including (without limitation) Tenant’s obligation to pay Tenant’s share of real estate taxes, insurance costs and utility charges at all times during the Renewal Term.
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REGENXBIO Inc. (RGNX)Base Rent Abatement. Provided a Default does not then exist under the Lease, Landlord hereby grants Tenant an abatement (“Base Rent Abatement”) of the Base Rent payable under the Lease with respect to the entire Premises for the 5 month period beginning on October 1, 2021 and ending on February 28, 2022. Thereafter, Tenant shall pay the full amount of Base Rent due in accordance with the provisions of the Lease. The Property Management Fee set forth in Section 9.2(w) of the Lease shall not be abated and shall be based on the amount of Base Rent that would have been payable but for the Base Rent Abatement.
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Snowflake Inc.Base Rent Abatement for First Phase. Provided that no event of default is occurring, and subject to the terms of this Section 3.2 below, then during the last nine (9) months of the Lease Term (collectively, the “Base Rent Abatement Period”), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the portion of the Premises consisting of the entire Premises, less the third (3rd) floor of 450 Concar North Tower (the “First Phase”), during such Base Rent Abatement Period (collectively, the “Base Rent Abatement”). Tenant acknowledges and agrees that the foregoing Base Rent Abatement has been granted to Tenant as additional consideration for entering into this Lease, and for agreeing to pay the Rent and perform the terms and conditions otherwise required under this Lease. Notwithstanding the foregoing, unless an Abatement Condition then exists, Landlord shall, on a month by month basis commencing on the Lease Commencement Date, accelerate any remaining Base Rent Abatement relating to a full month during the Base Rent Abatement Period for the First Phase forward, to apply to the Base Rent that would otherwise be due with respect to the next occurring month of the Lease Term (the “Landlord Base Rent Abatement Acceleration Election”), in which case Tenant shall have no obligation to pay Base Rent attributable to the First Phase for such next occurring month of the Lease Term, and the Base Rent Abatement that is accelerated forward shall no longer be applicable during the Base Rent Abatement Period. Landlord may make such election on a month by month basis with respect to each of the months of the Base Rent Abatement Period. In addition, commencing on the Lease Commencement Date, if Landlord has not exercised the Landlord Base Rent Abatement Acceleration Election on or before the date that the next installment of Base Rent is due under the Lease, and provided that the Lease has not been terminated as a result of any default of Tenant or rejection of the Lease in bankruptcy (the “Abatement Condition”), then Tenant shall have the right, at Tenant’s option, on a month by month basis commencing on the Lease Commencement Date, to accelerate any Base Rent Abatement relating to a full month during the Base Rent Abatement Period forward to apply to the Base Rent that would otherwise be due with respect to the next occurring month of the Lease Term (the “Tenant Base Rent Abatement Acceleration Election”), in which case Tenant shall have no obligation to pay Base Rent attributable to the First Phase in such next occurring month of the Lease Term, and the Base Rent Abatement that is accelerated forward shall no longer be applicable during the Base Rent Abatement Period. Tenant may not elect to accelerate more than one (1) month of such Base Rent Abatement at any particular time.
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NeuroPace IncAbated Base Rent. Provided that Tenant is not then in material or monetary default of the Lease beyond applicable notice and cure periods, then during the first two (2) full calendar month(s) of the Extended Term (the “Rent Abatement Period”), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the Premises during such Rent Abatement Period (the “Rent Abatement”). Landlord and Tenant acknowledge that the aggregate amount of the Rent Abatement equals $488,510.40 (the “Abated Base Rent”). Tenant acknowledges and agrees that the foregoing Rent Abatement has been granted to Tenant as additional consideration for entering into this Amendment, and for agreeing to pay the rental and performing the terms and conditions otherwise required under the Lease. If Tenant shall be in material or monetary default under the Lease and shall fail to cure such default within the notice and cure period, if any, permitted for cure pursuant to the Lease, and the Lease is terminated thereafter, then Landlord may at its option, by notice to Tenant, elect, in addition to any other remedies Landlord may have under the Lease, that Tenant shall immediately become obligated to pay to Landlord all unamortized Abated Base Rent (i.e., based upon the amortization of the Abated Base Rent in equal monthly amounts, without interest, during the period commencing on the Extended Term Commencement Date and ending on the Extended Term Expiration Date).
The lease for the Building 3 Premises (the “Building 3 Lease”) will commence on or about August 1, 2020 and shall continue for a period of 6.5 years (the “Building 3 Initial Term”). The initial monthly rent during the Building 3 Initial Term will be approximately $0.6 million, with annual year-over-year increases of approximately 3%, with rent abatement for the first 24 months after the rent commencement date of September 1, 2020 (resulting in approximately $7.2 million of rent abatement). In addition, the Company will be required to pay its proportionate share of property maintenance and operating expenses. As part of the Building 3 Lease, the Company must provide a security deposit, in the form of a letter of credit in lieu of cash, of approximately $3.0 million. The Landlord will provide a tenant improvement allowance of approximately $1.2 million.
What does rent abatement mean?
Rent abatement means the tenant pays reduced rent or no rent for a set period while the lease stays in force. The tenant keeps the premises and all other lease obligations; only the rent is lowered or suspended. Abatement can cover all rent or only part of it, for example base rent but not operating costs.
There are two kinds of rent abatement:
- Negotiated abatement: the landlord agrees upfront to waive rent for some months, usually at the start of a commercial lease, to win the tenant or to cover the time needed to fit out the space.
- Triggered abatement: the rent drops because the tenant cannot use all or part of the premises, for example after a fire or flood, during major repairs, or when the landlord hands over the space late. In residential leases, local law can also allow abatement when the home is not habitable.
Rent abatement example
A tenant signs a five-year office lease at $10,000 a month and negotiates three months of base rent abatement at the start.
- Rent over the lease: 60 months × $10,000 = $600,000
- Abated rent: 3 months × $10,000 = $30,000
- Rent actually paid: $570,000, an effective rent of $9,500 a month
The headline rent stays at $10,000, which matters to the landlord for the building’s valuation and later renewals. The tenant gets the lower effective cost.
Rent abatement vs free rent
In commercial real estate the two terms are often used for the same thing: months in which no base rent is due. The difference is scope. Free rent is always a full waiver for a fixed period agreed at signing. Rent abatement is broader: it can be partial, it can cover only base rent or only additional rent, and it can be triggered later by an event rather than agreed upfront.
Do you have to pay back rent abatement?
Usually not. Abated rent is waived, not deferred. Many commercial leases add a recapture provision, though: if the tenant defaults or ends the lease early, the landlord can claim the abated rent back. Some leases only grant the abatement while the tenant is not in default, as several of the examples above show. Read both before signing.
How to write a rent abatement clause
A clear rent abatement clause answers five questions:
- What triggers it: a set period after commencement, or an event such as casualty, a delay in delivery or a loss of access.
- How much is abated: all rent or only base rent, in full or in part, for example in proportion to the unusable floor area.
- For how long: fixed dates, a number of months, or until the premises are usable again.
- Conditions: notice the tenant must give, and whether abatement stops during a default.
- Recapture: whether abated rent becomes payable if the tenant defaults or leaves early.
Sample clause: Rent abatement
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Rent abatement clauses are standard in commercial lease agreements, office and retail leases, and commercial subleases, where landlords use abatement periods as incentives. They often sit next to clauses on additional rent and acceleration of rent. In residential leases, abatement is more often a tenant right under local habitability law than a negotiated term.
Free templates to add this clause to
Commercial lease agreement template (office, retail and warehouse space)Sets base rent by period, the commencement date and your share of operating costs. Add the clause to say which months are rent-free.
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Office sublease agreement templateStates that rent is paid without abatement. If the subtenant negotiated free months, replace that line with the clause.
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Lease termination agreement templateSettles any rent previously deferred or abated when a lease ends early, the moment a recapture provision applies.
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Abatement periods, recapture conditions and the date full rent starts are easy to lose track of across a portfolio of leases. In fynk you can store them as contract metadata and get a reminder before an abatement period ends.
Related clauses
- Untenantability The untenantability clause in a lease agreement addresses the conditions under which a rented property becomes uninhabitable due to damage or destruction, such as from a fire or natural disaster. This clause typically outlines the rights and responsibilities of both the landlord and tenant, including possible rent abatement or the termination of the lease if repairs cannot be made within a reasonable time.
- Tenant improvement allowance A tenant improvement allowance (TIA) is an amount a landlord agrees to pay toward building out or renovating a commercial space for a new tenant. It is usually set per square foot, paid against invoices once work is done, and limited to improvements described in the lease's work letter.
- Proration of rent The proration of rent clause stipulates that the tenant's rent amount will be adjusted proportionally based on the number of days they occupy the property in a given period. This ensures that both the tenant and landlord are fairly compensated if the lease term begins or ends mid-month.
- Rent escalation A rent escalation clause is a provision in a lease agreement that allows for periodic increases in the rental amount, often tied to specific benchmarks like inflation indices, market rates, or predetermined schedules. This clause ensures that rental income keeps pace with rising costs or market conditions over the lease term.
Frequently asked questions
In a commercial lease, rent abatement is usually a negotiated period, often the first months of the term, in which the tenant pays no or reduced base rent. Landlords offer it as an incentive instead of lowering the headline rent.
Not quite. A rent reduction permanently lowers the rent for the rest of the lease. Rent abatement is temporary: once the abatement period ends, the full rent is due again.
Only where local law allows it and under strict conditions. Withholding rent without a legal basis can put the tenant in default. Abatement agreed in the lease or granted by a court is the safer route.
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