If a tenant has temporary financial problems, they may ask the landlord for a Rent Deferral Agreement.
The agreement allows the tenant to pay a lower monthly rate for the designated period in deferment later, as defined in the Rent Deferral Agreement.
A Rent Deferral Agreement modifies the original lease agreement between a landlord and a tenant so the tenant can pay a reduced rental rate for a period, to be topped off in full later, potentially with interest.
Depending on your state, a Rent Deferral Agreement may also be known as:
Landlord and Tenant Deferment Agreement
Tenant Rent Deferral Agreement
A tenant can ask the landlord for a Rent Deferral Agreement if they need to postpone the monthly rent. Both residential and commercial tenants can use rent Deferral Agreements.
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To create your document, please provide:
Date: The date when the Rent Deferral Agreement is to be executed.
Original Rental Agreement: Define the beginning and the end of the effective lease agreement. Indicate if the deal is for a residential or commercial property.
Premises: Full address and description of the premises identified in the rental agreement.
Landlord information: Full name and address of the landlord. Select if the landlord is an individual or business/organization entity.
Tenant information: Full name and address of the tenant. Select if there is a guarantor in the lease agreement.
Select the reason for rent deferral: Reasons may include economic hardship, COVID-19, and force majeure. You can also define a custom reason.
Rent Deferral: Describe the current rent period and regular rent amount before selecting full or partial deferral.
Other amounts: Enter if the tenant is supposed to pay the landlord for additional obligations. They can also be deferred.
Deferral period: Enter the beginning and end of the deferred rent payment as agreed, including the number of payments deferred.
Rent Repayment: Define how the deferred payments will be satisfied.
Dispute Resolution: Define the preferred dispute resolution method, such as arbitration and court of law. This includes the local governing jurisdiction.
Guarantor: An organization or person guaranteeing against nonpayment. The guarantor is responsible if the primarily liable party is unable to meet liabilities.
Landlord: A person or organization owning the rental property in question.
Tenant: A person or organization who rents the property from the landlord.
Force majeure: In this context, this is an unforeseeable circumstance preventing the tenant from fulfilling the lease agreement.
A Rent Deferral Agreement needs to be signed by the tenant and landlord. For any entity tenant or landlord, an authorized representative will sign the document. It is not required to be notarized, but you can do so as a precaution against future challenges to the signatures.
After printing and signing the document, the landlord and tenant should each have a copy of the form for safe-keeping. The landlord may ask for other documents from a commercial tenant as proof of temporary business disruption.
Rent Deferral and Rent Abatement are two different types of relief offered by a landlord as a concession to a tenant. Rent deferral refers to a postponement of rental payments until a later time, to be defined in a Rent Deferral Agreement executed by the landlord and the tenant. Rent deferral can be complete or partial. The tenant is obligated to repay the deferred portion of the rent at the end of the deferral period. The payment schedule and any interest charged will be defined in the agreement. On the other hand, rent abatement is a free rent concession for a limited period. It can be for any reason, such as an incentive to a tenant for agreeing to an extended lease term. By nature, landlords are unlikely to offer rent abatement for longer than rent deferral, with a couple of months the most common.
The landlord may want to consider:
Obtaining substitute tenants if the lease is terminated.
The history of lease amendments history with current and previous tenants.
Any restrictions that may prevent the execution of a Rent Deferral Agreement. The limits may be imposed by the management agreement, partnership, or mortgage conditions.
The tenant may want to consider:
The ability to resume full-capacity operations in the short and long terms.
Operating costs and other obligations.
Other sources of tenant relief, including government assistance, business insurance, and tax relief programs.
The ability to meet rent payments based on the current financial situation.
Rent Relief programs for tenants affected by COVID-19 are available in the United States, but not on the federal level. The city of Los Angeles, for example, approved $103 million for rent relief, so far the most extensive program in the country. California also has a moratorium on evictions, which will end 90 days after the Governor lifts the state’s COVID-19 emergency. Check for rent relief programs in your state and county at COVID-19 Relief Programs for Businesses and Employers.
Landlords can file eviction notices during the coronavirus pandemic or any other state of emergency unless specifically forbidden otherwise. However, if your state, city, or county has put a hold on evictions, family courts will not be processing eviction so any eviction notices would have no teeth behind them. Without a court-enforced eviction, it would be illegal for landlords to cut off the water or electricity, change the locks, and so forth.
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