Abatement

Rent Abatement refers to scenarios where the Premises becomes partially or totally unusable as a result of Partial Damage, Total Destruction, or Hazardous Substances (where the Lessee was not responsible) and therefore, Rent is reduced. Rent is abated until repairs, restoration or remediation are completed and in proportion to the degree that the Lessee’s use has been impaired.

A landlord’s business liability insurance often covers Rent Abatement. Thus, the costs associated with property damage would be paid by the insurer, as long as the landlord pays the insurance policy’s deductible. It is important to note a tenant would need renter’s insurance or business liability insurance to cover the costs of damaged property in this scenario. The tenant may also need business interruption insurance to cover the expenses associated with financial losses that a company could suffer while a property is repaired.

Remedies

The Lessor is obligated to commence repairs or restoration within 90 days otherwise the Lessee may give 60 days notice to terminate the Lease. The Lessor will have 30 days from the Lessee’s notice to begin repairs and/or restorations; if they successful begin work, then they void the Lessee’s termination notice.