Natural disasters and leases

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From Brian Morrissey
Vice President
Jones Lang LaSalle

Hurricanes, floods, and snow in October. Just another season in New England.
I was one of the fortunate ones during  Hurricane Irene. My family was safe and there was no damage to my house. I did lose power for a week. This got me thinking about lease terms that relate to repair, services and restoration.

There is no standard language when it comes to a landlord providing services to a space. Was damage caused by the landlord’s negligence or willful misconduct? Does it have to qualify as gross negligence? What if the landlord is using reasonable efforts to remedy an interruption in services and utilities? Should it be “best efforts” or “commercially reasonable efforts?”

What happens if the landlord is unable to provide services after one, three or even ten days? Should these services be within the landlord’s reasonable control? When does the tenant’s obligation to pay rent abate?
I was walking through a building on the North Shore recently where the first floor had been completely flooded. The landlord had to remove carpeting and cut the sheet rock 6” above the water damage. Many of the tenants stacked furniture on top of their desks. Who is responsible for the cost to rebuild?

Many tenants do not spend much time focusing on these clauses in their lease. The focus is usually on rental rate, length of obligation and the improvement allowance. Other terms take a back seat.

No one expects to come to work and find their desk floating. It is important, however, to negotiate terms that will protect you in the event that this becomes a reality.

– Brian


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