Rent Abatement Clauses
(Commercial Lease) (Pro-Tenant)

Summary

These rent abatement clauses may be included in a commercial lease to provide the tenant with a right to abate rent when the condition of the leased premises or the property or a violation of the lease prevents the tenant from using or profiting from the premises. These clauses contain practical guidance, optional clauses, and drafting notes. A commercial lease rarely contains one single rent abatement clause. Rather, rent abatement is likely to appear in several different sections of the lease and will apply differently in each scenario. Generally, any lease that contains one or more rent abatement clauses should contain a prohibition on the ability of the tenant to withhold rent during the time such clauses are in effect. Rent abatement clauses are used when the tenant is unable to physically occupy part or all of the premises due to casualty, lack of basic utilities or services, delay in possession, or the presence of hazardous substances and therefore should not have to pay rent. Rent abatement is also used to enhance the desirability of the premises during transitional periods. For example, when the landlord is seeking tenants for a new building, it may offer a rent abatement until the property reaches a certain level of occupancy. Likewise, the tenant may be provided with the right to abate rent if the property falls below a threshold of occupancy or important anchor tenants leave or fail to operate at the property. Finally, if the tenant has a non-compete clause giving it the right to operate a certain use exclusively in the property and that clause is breached by the landlord, the tenant will want to have the right to abate all or a portion of the rent until the breach is remedied. Clauses governing rent abatement are often highly negotiated by the parties to a commercial lease. The clauses below favor the tenant but contain drafting notes and optional clauses from both the landlord’s and the tenant’s perspectives. Defined terms used in this clause should be conformed to those used in the relevant lease. For additional rent abatement clauses, see Rent Abatement Clauses (Commercial Lease) (Pro-Landlord), Interruption of Services with Rent Abatement Clause (Commercial Lease) (Pro-Tenant), Rent Concession Clause (Commercial Lease) (Pro-Tenant), and Rent Concession Clause (Commercial Lease) (Pro-Landlord). For further guidance on drafting and negotiating rent abatement provisions in commercial leases, see Office Lease Agreements, Retail Lease Agreements, and Industrial Lease Agreements. For further information on commercial leasing, see Industrial Leasing Resource Kit, Office Leasing Resource Kit, and Retail Leasing Resource Kit.