What is Free Rent / Abatement?
A lease concession where the tenant is excused from paying base rent for a defined period, though CAM obligations may or may not be included.
Definition
Free rent (also called rent abatement) is a lease concession where the tenant is excused from paying base rent for a defined period, typically at the beginning of the lease term. Whether the free rent period also abates CAM charges and operating expense pass-throughs depends on the specific lease language — some leases abate only base rent while requiring CAM payments from day one, while others abate all charges. This distinction is critical for CAM reconciliation because it determines when the tenant enters the expense recovery pool. If CAM is abated during the free rent period, the landlord absorbs those costs, reducing the recovery ratio. Property controllers must read the abatement clause carefully to configure billing systems correctly for the initial lease period.
Related Terms
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