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Repair, Restoration and
Rights to Terminate
Although damage or destruction of
property is usually covered by insurance,
the parties must still negotiate and the
READ CAREFULLY: lease should address (a) the party
responsible for repairing the premises
Casualty and Insurance and tenant improvements, (b) the proce-
dure for determining that party’s obliga-
tion to repair based on the extent of dam-
Clauses in age, which may be a percentage or dollar
figure, (c) the timeframe for completing
the repairs and restoration, (d) the time-
Medical Office Leases frame within which the party making the
repairs must notify the other party that it
intends to complete the repairs and
restoration within the agreed upon time-
fter being hit by hurricanes in personal property, and the tenant should frame, and (e) each party’s ability to ter- BY LINDA SPAULDING WHITE
2004 and 2005, commercial land- insure its furniture, fixtures and equip- minate the lease.
Alords and tenants in South Florida ment and its personal property. Which While a landlord’s and tenant’s reasons
had to deal with the casualty and insur- party will obtain insurance with respect will differ, termination of the lease is rent abatement commences and ends is a
ance clauses in their leases, which are to tenant improvements is often subject generally tied to the extent of the dam- matter of negotiation, but it typically
oftentimes the more neglected lease pro- to negotiation. Ultimately, the tenant age, the amount of available insurance runs from the date of the damage or
visions. When negotiating a medical pays all costs of insurance, because the proceeds, the length of the remaining destruction to the date the restoration is
office or health care facility lease, the cost of any insurance obtained by the lease term, and the timeframe for com- complete. If the tenant is prevented from
casualty and insurance clauses merit landlord is passed on to the tenant as an pleting the repairs and restoration. The using only a portion of the premises, the
careful attention in order to apportion operating expense. Other types of cover- lease should identify the party entitled to rent abatement should be proportional to
the risks and economic burdens that a age that the parties should consider are the insurance proceeds for the destroyed the percentage of lost space.
sudden and external disaster, such as a business interruption and extra expense tenant improvements upon such a termi-
fire or hurricane, can cause. Key issues and rental income insurance. Con- nation. Next Step
that should be considered in negotiating sideration should also be given to ad- Dealing with such issues as casualty
these clauses are as follows: dressing workers compensation coverage Rent Abatement and insurance clauses in leases is a com-
in the lease. Customarily, the casualty clause will plex topic that goes beyond the scope of
Insurance and Waiver of The lease should contain a waiver of provide for the abatement of rent if the this article. Please consult with an attor-
Subrogation subrogation clause, whereby the landlord tenant cannot and does not use its prem- ney experienced in handling leases to
The lease should specify the types of and tenant release each other from any ises because of damage to the building provide the appropriate counsel for your
insurance to be carried by both the land- claims and demands for damage, loss or and/or its premises. The rent abatement individual situation.
lord and tenant. Generally, both parties injury to the leased premises and/or the should also apply to those pass-through
should be required to maintain commer- building or to the other party’s property. expenses that are generally considered to Linda Spaulding White is Of Counsel in
cial general liability and property damage The waiver of subrogation rarely, if ever, be additional rent – the tenant’s propor- the Fort Lauderdale office of the statewide
coverage. The landlord should insure the applies damage related to personal injury tionate share of real estate taxes, com- law firm, Broad and Cassel. She can be
building (the policy should include or death. mon area maintenance costs, insurance reached at (954) 745-5251 or
windstorm coverage) and the landlord’s expenses and similar charges. When the lwhite@broadandcassel.com.

4 December 2007 hospitalnews.org South Florida Hospital News