14 points in moderate damage and destruction clause for strong tenant's lease

With the looming threat of fire, hurricanes, terrorist acts and other disasters, landlords and tenants take a closer look at their lease clauses for damage and destruction.


from Commercial Lease Law Insider, September 2006


"This will be the first clause that is looked at after a building suffers a casualty, since it spells out both the landlord's and tenant's rights and obligations when a casualty occurs.


A moderate clause using a more moderate damage and destruction clause eliminates protracted and time-consuming negotiations between landlords and prospective tenants, and still protects the landlord.


1. Tenant must notify landlord of casualty.
2. Landlord keeps tenant on hook for rent after casualty
3. Landlord gets right to decide if damage can be reasonably repaired within set time frame.
4. The landlord's repair obligation is only if the space that is damaged or rendered unusable or inaccessible by total or substantial damage.
5. Landlord should use reasonable efforts to make repairs.
6. Landlord must repair space only to the extent permitted by law.
7. Tenant would be responsible for certain repairs, such as personal property, fixtures and alterations.
8. Tenant must cooperate with the repairs.
9. Landlord should give the tenant rent abatement proportionate to the percentage of the space that is unusable or inaccessible.
10. Tenant's rent abatement would end when the repairs are substantially complete.
11. Landlord has the right to terminate the lease.
12. List termination procedures in the lease.
13. There would be no abatement, or termination right, if the damage was caused by tenant's negligence.
14. Landlord requires a waiver of its rights under state laws that may give a tenant whose space has been damaged the right to terminate its lease. A tenant would demand that the landlord also waive termination rights under state law.


A tough damage and destruction clause typically states that the landlord is not required to make repairs to a tenant's space to the extent that they would cost more than the insurance proceeds. Strong tenants balk at that limitation. Tenants argue that the landlord should be responsible for all repairs."for more information see www.houstonrealtyadvisors.net or www.houstonrealtyadvisor.com ask for Ed A. Ayres 713 782-0260