The Damage and Destruction provision in a lease specifies what will happen if the leased premises or the building housing the leased premises is damaged or destroyed. It typically provides that the landlord may elect, in its sole discretion, to continue the lease or to terminate it. In the case of continuation, it usually provides for an abatement of rent (reduction) in the same proportion that tenant's use of the leased premises is impaired.
The tenant must make sure that the abatement of rent language is fair. Some leases base it on the amount of square footage of the leased premises that is damaged or destroyed. This is unfair since sometimes the entire leased premises may not be useable even when the damage is to a small area. For example, if the entry is blocked, it does not matter if the rest of the premises is not damaged; no one can enter. In the case it landlord's responsibility to repair damage, make sure the tenant retains the right to complete improvements following the landlord's repair or reconstruction before rent obligation resumes.
We are here to help you and your clients with all aspects of commercial property management. Please contact us for further assistance!
Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters