Increase/Decrease Rent Amendment

An Increase/Decrease Rent Amendment is a legal contract that amends a Lease Agreement to either increase or decrease the rent amount due. Once both parties sign the amendment, it becomes a legally binding part of the original lease agreement.

Note: Rent increases may be subject to state or municipal Rent Control Laws.

Why Use an Amendment to Increase or Decrease Rent?

When it comes to lease agreements, circumstances often change for both the tenant and landlord from the time the original lease agreement was signed. Those circumstances may result in needing to either increase or decrease the rent amount. These reasons might include:

• Tenant Added to the Lease – A landlord may have agreed to allow a tenant to add another individual to the lease agreement. Adding a tenant is likely to come with additional monthly costs. As a result, a landlord may request an increase in rent to offset these additional costs.
• Tenant Removed from the Lease – Similar to adding a tenant, a landlord may agree to have a tenant removed from the lease. While the landlord is not under any obligation to decrease the rent they may decide to do so if the rental unit will have less costs.
• Increased Costs – Costs tend to go up over time and, as can be seen with inflation, sometimes quicker than expected. As costs rise a landlord may request the tenant to agree to an amendment to increase the rent. Sometimes, additional terms are provided such as extending the number of months before the lease term ends or the request is made as part of a lease renewal.
• Competitive Market – A landlord may offer to decrease the rent for a good tenant in a competitive market to entice them to stay.
• Financial Hardship – In certain cases a landlord may be willing to lower the rent if a tenant is going through a financial hardship, especially if it is only temporary.

When it comes to a decrease in rent, landlords should be aware of their options. This is especially true if the rent decrease is due to the financial hardship of the tenant. In these situations the landlord may consider the following options, depending on the terms of the lease agreement and state laws:

1. Rent Reduction – This is the most straightforward option and simply involves a reduction in the rent amount. This reduction could be until the end of the lease term or for a certain specific period (e.g., 3 months for a new mom on unpaid maternity leave).
2. Rent Abatement – This is similar to rent reduction, except there are additional responsibilities placed on the tenant. The tenant will agree to stay current with their new rent payments and agree to pay any reduced rent amount in full if they default on their rent payments.
3. Rent Deferral – Instead of simply reducing the rent amount, a landlord can decide to defer a portion of the rent for a certain time. The deferred rent can then be paid either in a lump sum or added to later rent payments at an agreed-upon time.

When an increase or decrease in rent is needed, a landlord should prepare a formal amendment as opposed to a verbal agreement. Doing so will help avoid any future legal disputes over the monthly rent and any additional details that were agreed upon between the landlord and tenant.

What to Include in an Increase/Decrease Rent Amendment

An Increase/Decrease Rent Amendment should include the following:

1. Type of Amendment: indicate whether it is to increase or decrease the rent
2. Date of the amendment
3. Landlord’s name
4. Landlord’s business address
5. Tenant’s name
6. Tenant’s rental property address
7. Date of the original lease agreement
8. Acknowledgment that this amendment modifies the original lease agreement
9. Two Options: check the box indicating that the amendment is to increase or decrease the rent. Provide the amount of the increase/decrease, the effective date, and the new monthly rent payment. It should also note that all other terms of the original lease agreement not addressed in this amendment remain the same
10. Landlord’s signature and date
11. Tenant’s signature and date

Our template provides landlords with the standard elements used in an amendment to increase or decrease rent. However, the situation may require the amendment to address some additional information. This may include:

1. Additional Tenant Privileges – If the amendment is for a rent increase, it may be based on additional privileges provided to the tenant such as the allowance of a pet or a new tenant.
2. Security Deposit – If there is a rent increase, a landlord may also request a proportionate increase for the security deposit.
3. Extending the End Date – Sometimes an extension of the end date is provided with an increase or decrease in rent amendment. It could be that rent prices are on the rise and the tenant wants the security of having a longer lease. Or, it could be that the rental market is competitive and the landlord once to further entice the tenant to stay by extending their lease.

Just like with the original lease agreement, both parties should have a signed copy of this Amendment. The Amendment is now part of the original lease agreement and should be kept with it.

When increasing or decreasing a tenant’s rent, if a significant number of new terms are required, the landlord may consider having the tenant(s) sign a new lease agreement. This may be clearer than having an amendment addressing several different sections of the lease agreement.

Can a Tenant Refuse to Sign a Rent Increase Amendment?

The answer to this question is that it depends. Mostly, it depends on if there are any rent control laws, the terms of the lease agreement, and the reason for the rent increase.

A rent control law is a regulation that limits how much and how frequently landlords can increase a tenant’s rent. If an increase violates a state or local rent control law, a tenant can refuse to sign a rent increase amendment. Here is a chart that details how rent control is addressed in every state:

Beyond rent control laws, the remaining factors are the terms of the lease agreement and the reason for the rent increase. Here are some things to consider:

During a Lease Term – Typically, a landlord cannot require a tenant to sign a rent increase amendment in the middle of a lease term unless the lease agreement provides specific terms that address this option.

End of Lease Term – A rent increase amendment may be presented to a tenant at the end of a lease term along with a Lease Renewal Letter. The tenant will then have the opportunity to decide if they want to accept the increased rent to renew their lease.

Month-to-Month Lease – Rent increases are often requested from tenants in a month-to-month lease agreement. In this situation, the landlord is required to give the tenant the appropriate notice required by state law. A tenant can refuse to sign the amendment but the landlord can also then decide to send a Lease Non-Renewal Letter and end the month-to-month agreement.

Regardless of the timing or the terms of the lease, a landlord cannot raise the rent for discriminatory reasons in violation of laws such as The Fair Housing Act (FHA) or for retaliatory reasons.

What’s Next?

Once the amendment has been signed there are no further steps needed. However, a landlord can take proactive steps to make sure the tenant doesn’t forget the change in the lease agreement. For instance, a landlord may want to send the tenant an email a few days before the first month the new rent payment goes into effect to remind them of the new rent amount.