Rent abatement comes up often in reference to commercial properties. But it can also apply to residential leases. For that reason, residential property owners should understand abatement and how it affects landlords’ and tenants’ rights.
What is abatement, and when does it apply?
Abatement terms can vary among leases. But these terms free tenants from paying rent when a property becomes unusable through no fault of their own. Typically, these clauses pertain to damage caused by natural disasters such as fire, flood, earthquakes, or tornadoes. Abatement also applies when the government orders a property evacuated or when other major problems render a unit unsafe. Examples of major issues that trigger abatement are mold infestation or a broken furnace during a cold winter. However, abatement does not come into play when the tenant causes the damage. And minor inconveniences like a broken kitchen appliance also fall short of abatement requirements. A problem must render the property partially or entirely uninhabitable for abatement to apply.
How is the rent decrease determined, and how long does it last?
Whether a tenant may decrease or stop rental payments depends on the extent of the property damage. If the entire unit is uninhabitable, rental payments usually cease altogether until the property becomes fit for occupancy again. But if the property is partially usable, the landlord should calculate an appropriate rental decrease in one of two ways. He can appraise the unit’s percentage of uninhabitable or assess the property’s decreased fair market value. Rent abatement lasts only until appropriate repairs restore the unit’s viability.
Should abatement terms be included in my lease?
Abatement terms typically aren’t required in a rental agreement. However, check your state and local statutes to ensure your lease complies with relevant guidelines. On the one hand, including abatement clauses could be risky if you can’t collect rent until you repair fire or tornado damage. On the other hand, if your property becomes unusable through no fault of your tenants, they are entitled to some relief. Having specific terms in your lease can help clarify when and how abatement should apply. It could also prevent a costly trip to court. In addition, an abatement clause may make your lease more attractive to potential tenants.
A tenant claiming abatement rights must notify the landlord of the damage and its impact on the property. Typically, a landlord will have a specified grace period to make the needed repairs before a tenant can withhold rent. Handling repairs promptly and maintaining good communication with tenants will minimize the risk of losing income to abatement.
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