Commercial Lease Casualty Damage and Restoration Clause
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A Commercial Lease Casualty Damage and Restoration Clause is a commercial lease clause (within a commercial lease) that addresses the rights, obligations, and procedures for both the landlord and tenant if the leased property suffers damage or destruction from casualty damage (unforeseen events such as fires, natural disasters, or other casualties).
- Context:
- It can (typically) be expressed in Commercial Lease Casualty Damage and Restoration-Related Sentences.
- It can (typically) contain Commercial Lease Casualty Damage and Restoration-Related Provisions, such as:
- Damage Assessment and Repair Feasibility Provision, which establishes the process for assessing the extent of the damage and determining the feasibility and timeline for repairs.
- Definition of Significant Damage or Destruction (Casualty Event) Provision (with labels CASUALTY_EVENT_DEFINITION, DAMAGE_THRESHOLD), a definition provision which defines what constitutes a casualty event that would activate the clause, such as:
For the purposes of this agreement, 'significant damage or destruction' shall be defined as any casualty event resulting in damage exceeding 50% of the total value of the leased premises,(CASUALTY_EVENT_DEFINITION, DAMAGE_THRESHOLD)1as determined by a licensed insurance adjuster or other qualified professional.(DAMAGE_ASSESSMENT)2
- Tenant's Casualty Damage Notification Obligation Provision (with labels TENANT_OBLIGATION, NOTICE_REQUIREMENT, NOTICE_TIMELINE), a notification obligation provision which requires the tenant to notify the landlord of any casualty damage, such as:
The Tenant shall notify the Landlord in writing of any casualty damage to the leased premises(TENANT_OBLIGATION, NOTICE_REQUIREMENT)1within 48 hours of discovering such damage,(NOTICE_TIMELINE)2providing a detailed description of the extent and nature of the damage.(NOTICE_CONTENT)3.
- Casualty-Related Right to Terminate Provision (with labels TERMINATION_RIGHT, TERMINATION_CONDITION, TERMINATION_NOTICE), a termination right provision which allows either party to terminate the lease under certain conditions, such as:
In the event that the leased premises are damaged or destroyed to such an extent that they cannot be repaired or restored within 120 days,(TERMINATION_CONDITION, REPAIR_TIMELINE)1either party may elect to terminate this lease by providing written notice to the other party(TERMINATION_RIGHT, TERMINATION_NOTICE)2within 30 days of the casualty event.(NOTICE_TIMELINE)3.
- Casualty-Related Landlord's Obligation to Repair Provision (with labels LANDLORD_OBLIGATION, REPAIR_STANDARD, REPAIR_TIMELINE), an obligation to repair provision which delineates the landlord's responsibilities to repair or reconstruct the damaged premises, such as:
The Landlord shall be responsible for repairing or restoring the leased premises to their pre-casualty condition,(LANDLORD_OBLIGATION, REPAIR_STANDARD)1commencing such repairs within 60 days of receiving notice of the casualty damage(REPAIR_TIMELINE)2and diligently pursuing completion of the repairs in a commercially reasonable manner.(REPAIR_DILIGENCE)3.
- Casualty-Related Rent Abatement Provision (with labels RENT_ABATEMENT, ABATEMENT_CALCULATION, ABATEMENT_DURATION), which provides for rent abatement or reduction during the period the premises are uninhabitable or being repaired, such as:
In the event of casualty damage rendering all or a portion of the leased premises unusable,(CASUALTY_EVENT)1the Tenant's rent shall be abated in proportion to the square footage of the unusable space compared to the total leased premises,(RENT_ABATEMENT, ABATEMENT_CALCULATION)2from the date of the casualty event until the repairs are completed and the premises are restored to a usable condition.(ABATEMENT_DURATION, REPAIR_COMPLETION)3.
- Casualty-Related Force Majeure Provision (with labels FORCE_MAJEURE_EVENT, PERFORMANCE_EXCUSED, NOTICE_REQUIREMENT), which may relieve both parties from fulfilling their contractual obligations due to acts of God or other uncontrollable events, such as:
Neither party shall be deemed in default of this lease for failure to perform its obligations(PERFORMANCE_EXCUSED)1if such failure is due to a casualty event, act of God, or other circumstances beyond the party's reasonable control,(FORCE_MAJEURE_EVENT)2provided that the affected party gives prompt written notice to the other party of the force majeure event.(NOTICE_REQUIREMENT)3.
- Casualty-Related Insurance Proceeds Allocation Provision (with labels INSURANCE_PROCEEDS, RESTORATION_OBLIGATION, EXCESS_PROCEEDS), a proceeds allocation provision which addresses the allocation and use of insurance proceeds related to the casualty damage, such as:
Any insurance proceeds received by the Landlord as a result of casualty damage to the leased premises shall be used first for the repair and restoration of the premises,(INSURANCE_PROCEEDS, RESTORATION_OBLIGATION)1with any excess proceeds remaining after the completion of such repairs to be retained by the Landlord.(EXCESS_PROCEEDS)2.
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- It can (often) be in a Commercial Lease Casualty Damage Article.
- It can be classified by the Clause Classification Rule:
- The clause contains all of the following labels:
- CASUALTY_EVENT, which refers to the occurrence of a casualty event that triggers the clause provisions, AND
- TRIGGERING_CONDITION, which specifies the circumstances or conditions that activate certain rights, obligations, or consequences related to the casualty event, AND
- At least one of the following labels:
- RESTORATION_OBLIGATION, which refers to the landlord's or tenant's duty to repair and restore the damaged premises, OR
- TERMINATION_RIGHT, which refers to the landlord's or tenant's right to terminate the lease under certain conditions related to the casualty event.
- The clause contains all of the following labels:
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- Example(s):
- A Comprehensive Casualty Damage and Restoration Clause (with Tenant's Casualty Damage Notification Obligation Provision, Casualty-Related Right to Terminate Provision, Casualty-Related Landlord's Obligation to Repair Provision, Casualty-Related Rent Abatement Provision, Casualty-Related Insurance Proceeds Allocation Provision), such as:
In the event of any casualty damage to the leased premises,(CASUALTY_EVENT)1the Tenant shall promptly notify the Landlord in writing,(TENANT_OBLIGATION, NOTICE_REQUIREMENT)2providing a detailed description of the nature and extent of the damage.(NOTICE_CONTENT)3If the damage assessment, conducted by a qualified professional, confirms that repairs cannot be completed within 90 days,(DAMAGE_ASSESSMENT, REPAIR_TIMELINE, TRIGGERING_CONDITION)4either party may terminate this lease by providing written notice to the other(TERMINATION_RIGHT, TERMINATION_NOTICE)5within 30 days of receiving the damage assessment report.(NOTICE_TIMELINE)6If the lease is not terminated, the Landlord shall commence repairs within 30 days of the damage assessment,(LANDLORD_OBLIGATION, REPAIR_TIMELINE)7and diligently pursue restoration of the premises to their pre-casualty condition,(RESTORATION_OBLIGATION, REPAIR_STANDARD, REPAIR_DILIGENCE)8subject to delays due to force majeure events,(FORCE_MAJEURE)9insurance claim processing,(INSURANCE_PROCEEDS)10or governmental approvals.(GOVERNMENTAL_APPROVALS)11Rent shall be abated in proportion to the unusable square footage of the premises(RENT_ABATEMENT, ABATEMENT_CALCULATION)12from the date of the casualty event until repairs are completed,(ABATEMENT_DURATION, REPAIR_COMPLETION)13unless the damage was caused by the negligence or willful misconduct of the Tenant or its agents,(TENANT_FAULT_EXCEPTION)14in which case no rent abatement shall apply.(NO_ABATEMENT)15All insurance proceeds received by the Landlord for casualty damage shall be used for restoration of the premises,(INSURANCE_PROCEEDS, RESTORATION_OBLIGATION)16with any excess proceeds remaining the property of the Landlord.(EXCESS_PROCEEDS)17.
- An Office Lease Agreement (OLA) Casualty Damage Clause (with Tenant's Casualty Damage Notification Obligation Provision, Casualty-Related Landlord's Obligation to Repair Provision, Casualty-Related Rent Abatement Provision, Casualty-Related Right to Terminate Provision), such as:
If the leased office space is damaged by fire or other casualty,(CASUALTY_EVENT)1the Tenant shall immediately notify the Landlord,(TENANT_OBLIGATION, NOTICE_REQUIREMENT)2providing all relevant details of the event.(NOTICE_CONTENT)3If the damage is such that it can be repaired within 90 days,(REPAIR_TIMELINE, TRIGGERING_CONDITION)4as determined by a licensed contractor,(CONTRACTOR_ASSESSMENT)5the Landlord shall repair the damage at its own expense(LANDLORD_OBLIGATION, REPAIR_COST)6and the Tenant's rent shall be abated in proportion to the unusable area of the premises(RENT_ABATEMENT, ABATEMENT_CALCULATION)7during the repair period.(ABATEMENT_DURATION)8However, if the damage is so extensive that it cannot be repaired within 90 days,(EXTENSIVE_DAMAGE, REPAIR_TIMELINE, TRIGGERING_CONDITION)9either party may terminate the lease by providing written notice to the other(TERMINATION_RIGHT, TERMINATION_NOTICE)10within 30 days of the casualty event,(NOTICE_TIMELINE)11and the Tenant shall not be liable for any further rent payments.(RENT_LIABILITY_TERMINATED)12
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- A Retail Lease Casualty Clause (with Casualty-Related Right to Terminate Provision, Casualty-Related Landlord's Obligation to Repair Provision, Casualty-Related Rent Abatement Provision) allowing the tenant to terminate the lease if the premises are destroyed to an extent that makes the space unusable for more than a specified period, such as:
Notwithstanding any other provisions of this lease, if the leased retail space is damaged or destroyed by casualty(CASUALTY_EVENT)1to such an extent that it cannot be restored to a condition suitable for Tenant's use within 180 days,(REPAIR_TIMELINE, SUITABILITY_FOR_USE, TRIGGERING_CONDITION)2as reasonably determined by an independent architect or engineer,(INDEPENDENT_ASSESSMENT)3Tenant may elect to terminate this lease by providing written notice to Landlord(TERMINATION_RIGHT, TERMINATION_NOTICE)4within 30 days of the casualty event.(NOTICE_TIMELINE)5If Tenant elects to terminate, Tenant shall have no further obligations under this lease,(LEASE_OBLIGATIONS_TERMINATED)6and any prepaid rent and security deposit shall be promptly refunded by Landlord.(PREPAID_RENT_REFUND, SECURITY_DEPOSIT_REFUND)7If Tenant does not elect to terminate, Landlord shall proceed with due diligence to repair and restore the premises,(LANDLORD_OBLIGATION, REPAIR_DILIGENCE)8and rent shall be abated in proportion to the unusable area of the premises(RENT_ABATEMENT, ABATEMENT_CALCULATION)9until the restoration is complete.(ABATEMENT_DURATION, RESTORATION_COMPLETION)10.
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- A Warehouse Lease Casualty Clause (with Tenant's Casualty Damage Notification Obligation Provision, Casualty-Related Landlord's Obligation to Repair Provision, Casualty-Related Rent Abatement Provision, Casualty-Related Right to Terminate Provision) that addresses the unique aspects of warehouse properties, such as:
In the event of casualty damage to the leased warehouse,(CASUALTY_EVENT)1the Tenant shall promptly notify the Landlord in writing,(TENANT_OBLIGATION, NOTICE_REQUIREMENT)2and the Landlord shall have the premises inspected by a qualified professional(LANDLORD_OBLIGATION, DAMAGE_ASSESSMENT)3to assess the extent of the damage and the necessary repairs.(REPAIR_ASSESSMENT)4If the damage is primarily cosmetic and does not materially impact the Tenant's use of the warehouse for its intended purpose,(COSMETIC_DAMAGE, SUITABILITY_FOR_USE, TRIGGERING_CONDITION)5the Landlord shall proceed with repairs(LANDLORD_OBLIGATION)6without any abatement of rent.(NO_RENT_ABATEMENT)7However, if the damage materially impacts the Tenant's use of the warehouse,(MATERIAL_IMPACT, TRIGGERING_CONDITION)8rent shall be abated in proportion to the unusable square footage(RENT_ABATEMENT, ABATEMENT_CALCULATION)9until repairs are completed,(ABATEMENT_DURATION, REPAIR_COMPLETION)10and if the repairs cannot be completed within 120 days,(REPAIR_TIMELINE, TRIGGERING_CONDITION)11either party may terminate the lease by providing written notice to the other(TERMINATION_RIGHT, TERMINATION_NOTICE)12within 30 days of the casualty event.(NOTICE_TIMELINE)13.
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- A Restaurant Lease Casualty Clause (with Tenant's Casualty Damage Notification Obligation Provision, Casualty-Related Landlord's Obligation to Repair Provision, Casualty-Related Rent Abatement Provision, Casualty-Related Right to Terminate Provision) that considers the specific needs of restaurant tenants, such as:
If the leased restaurant space is damaged by casualty,(CASUALTY_EVENT)1the Tenant shall promptly notify the Landlord,(TENANT_OBLIGATION, NOTICE_REQUIREMENT)2and the Landlord shall have the damage inspected by a licensed contractor within 10 days(LANDLORD_OBLIGATION, DAMAGE_ASSESSMENT, ASSESSMENT_TIMELINE)3to determine the extent of the damage and the estimated repair time.(REPAIR_ASSESSMENT)4If the damage is such that the restaurant cannot operate,(INOPERABILITY, TRIGGERING_CONDITION)5rent shall be fully abated from the date of the casualty event until repairs are completed(RENT_ABATEMENT, ABATEMENT_DURATION)6and the restaurant can resume operations.(REPAIR_COMPLETION, OPERATIONS_RESUMPTION)7If the repairs cannot be completed within 60 days,(REPAIR_TIMELINE, TRIGGERING_CONDITION)8the Tenant may elect to terminate the lease by providing written notice to the Landlord(TENANT_TERMINATION_RIGHT, TERMINATION_NOTICE)9within 15 days of being informed of the estimated repair timeline,(NOTICE_TIMELINE)10recognizing the shorter timeframe within which a restaurant needs to resume operations to maintain its business viability.(BUSINESS_VIABILITY)11If the Tenant elects to terminate, any prepaid rent and the security deposit shall be promptly refunded by the Landlord.(LEASE_TERMINATION, PREPAID_RENT_REFUND, SECURITY_DEPOSIT_REFUND)12
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- A Comprehensive Casualty Damage and Restoration Clause (with Tenant's Casualty Damage Notification Obligation Provision, Casualty-Related Right to Terminate Provision, Casualty-Related Landlord's Obligation to Repair Provision, Casualty-Related Rent Abatement Provision, Casualty-Related Insurance Proceeds Allocation Provision), such as:
- Counter-Example(s):
- Rent Escalation Clauses, which outlines the conditions under which the rent will increase, unrelated to casualty or damage events.
- Lease Renewal Clauses, which detailing the conditions under which the lease may be extended, not connected to damage or destruction of the property.
- Permitted Use Clauses: which defines the allowed uses of the leased premises but does not address casualty events.
- Subletting and Assignment Clauses: which governs the tenant's right to sublease or assign their interest in the leased premises but does not cover casualty-related situations.
- See: Insurance Clause, Damage and Destruction Clause, Business Interruption Insurance, Property Insurance.
References
2024
- https://lawinsider.com/clause/casualty-damage
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- Clause 1: Casualty Damage.
If the Premises or any part thereof shall be damaged by fire or other casualty,(CASUALTY_EVENT)1
Tenant shall give prompt written notice thereof to Landlord.(TENANT_NOTIFICATION_OBLIGATION)2
In case the Building shall be so damaged that substantial alteration or reconstruction of the Building shall, in Landlord's sole opinion, be required (whether or not the Premises shall have been damaged by such casualty)(SUBSTANTIAL_DAMAGE_DETERMINATION, TRIGGERING_CONDITION)3
or in the event any mortgagee of the Building should require that the insurance proceeds payable as a result of a casualty be applied to the payment of the mortgage debt(MORTGAGEE_PROCEEDS_REQUIREMENT, TRIGGERING_CONDITION)4
or in the event of any material uninsured loss to the Building, Landlord may, at its option, terminate this Lease by notifying Tenant in writing of such termination within ninety (90) days after the date of such damage.(LANDLORD_TERMINATION_RIGHT, TERMINATION_NOTICE_PERIOD, TRIGGERING_CONDITION, UNINSURED_LOSS_TRIGGER)5
If Landlord does not thus elect to terminate this Lease, Landlord shall commence(LANDLORD_RESTORATION_OBLIGATION, REPAIR_COMMENCEMENT)6
and proceed with reasonable diligence to restore the Building to substantially the same condition in which it was immediately prior to the happening of the casualty, except that Landlord's obligation to restore shall not exceed the scope of the work required to be done by Landlord at Landlord's expense in originally constructing the Building and installing the Tenant Improvements,(RESTORATION_SCOPE_LIMITATION, RESTORATION_STANDARD)7
nor shall Landlord be required to spend for such work an amount in excess of the insurance proceeds actually received by Landlord as a result of the casualty.(RESTORATION_COST_LIMITATION)8
When the portions of the Premises originally furnished at Landlord's expense have been restored by Landlord, Tenant shall, at Tenant's expense, complete the restoration of the Premises, including the reconstruction of all improvements in excess of those Tenant Improvements originally installed at Landlord's expense, and the restoration of Tenant's furniture and equipment.(TENANT_RESTORATION_OBLIGATION)9
Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof, except that, subject to the provisions of the next sentence, Landlord shall allow Tenant a fair diminution of rent during the time and to the extent the Premises are unfit for occupancy.(RENT_ABATEMENT)10
If the Premises or any other portion of the Building or the Project be damaged by fire or other casualty resulting from the fault or negligence of Tenant or any of Tenant's agents, employees, or invitees, the rent hereunder shall not be diminished during the repair of such damage and Tenant shall be liable to Landlord for the cost of the repair and restoration of the Building or the ...(TENANT_FAULT_EXCEPTION)11. - ...
- Clause 2: Casualty Damage.
A. If all or any part of the Premises is damaged by fire or other casualty,(CASUALTY_EVENT)1
Tenant shall immediately notify Landlord in writing.(TENANT_NOTIFICATION_OBLIGATION)2
During any period of time that all or a material portion of the Premises is rendered untenantable as a result of a fire or other casualty, the Rent shall xxxxx for the portion of the Premises that is untenantable and not used by Tenant.(RENT_ABATEMENT)3
Landlord shall have the right to terminate this Lease if: (1) the Building shall be damaged so that, in Landlord's reasonable judgment, substantial alteration or reconstruction of the Building shall be required (whether or not the Premises has been damaged);(SUBSTANTIAL_DAMAGE_DETERMINATION, LANDLORD_TERMINATION_RIGHT, TRIGGERING_CONDITION)4
(2) Landlord is not permitted by Law to rebuild the Building in substantially the same form as existed before the fire or casualty; (3) the Premises have been materially damaged and there is less than 2 years of the Term remaining on the date of the casualty; (4) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt;(MORTGAGEE_PROCEEDS_REQUIREMENT, TRIGGERING_CONDITION)5
or (5) a material uninsured loss to the Building occurs.(UNINSURED_LOSS, TRIGGERING_CONDITION)6
Landlord may exercise its right to terminate this Lease by notifying Tenant in writing within 90 days after the date of the casualty.(TERMINATION_NOTICE_PERIOD)7
If Landlord does not terminate this Lease, Landlord shall commence(LANDLORD_RESTORATION_OBLIGATION, REPAIR_COMMENCEMENT)8
and proceed with reasonable diligence to repair and restore the Building and the Leasehold Improvements (excluding any Alterations that were performed by Tenant in violation of this Lease).(RESTORATION_EXCLUSIONS)9
However, in no event shall Landlord be required to spend more than the insurance proceeds received by Landlord.(RESTORATION_COST_LIMITATION)10
Landlord shall not be liable for any loss or damage to Tenant's Property or to the business of Tenant resulting in any way from the fire or other casualty or from the repair and restoration of the damage.(LANDLORD_LIABILITY_EXCLUSION)11
Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Article, and agree that their respective rights for damage to or destruction of the Premises shall be those specifically provided in this Lease.(WAIVER_OF_LEGAL_RIGHTS)12
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- Clause 3: Casualty Damage.
16.01 If all or any portion of the Premises becomes untenantable by fire or other casualty to the Premises (collectively a "Casualty"),(CASUALTY_EVENT)1
Landlord, with reasonable promptness, shall cause a general contractor selected by Landlord to provide Landlord and Tenant with a written estimate of the amount of time required using standard working methods to Substantially Complete the repair and restoration of the Premises and any Common Areas necessary to provide access to the Premises ("Completion Estimate").(RESTORATION_TIMELINE_ESTIMATE)2
If the Completion Estimate indicates that the Premises or any Common Areas necessary to provide access to the Premises cannot be made tenantable within 270 days from the date the repair is started,(REPAIR_TIMELINE, TRIGGERING_CONDITION)3
then either party shall have the right to terminate this Lease upon written notice to the other within 10 days after receipt of the Completion Estimate.(MUTUAL_TERMINATION_RIGHT, TERMINATION_NOTICE_PERIOD)4
Tenant, however, shall not have the right to terminate this Lease if the Casualty was caused by the negligence or intentional misconduct of Tenant or any Tenant Related Parties.(TENANT_FAULT_EXCEPTION)5
In addition, Landlord, by notice to Tenant within 90 days after the date of the Casualty, shall have the right to terminate this Lease if: (1) the Premises have been materially damaged and there is less than 2 years of the Term remaining on the date of the Casualty; (2) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt;(MORTGAGEE_PROCEEDS_REQUIREMENT, TRIGGERING_CONDITION)6
or (3) a material uninsured loss to the Building occurs.(UNINSURED_LOSS, LANDLORD_TERMINATION_RIGHT, TRIGGERING_CONDITION)7
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- Clause 4: Casualty Damage.
If the Premises are damaged or destroyed other than by wrongful or negligent acts of Tenant or persons on the Premises with Tenant's consent,(CASUALTY_EVENT, TENANT_FAULT_EXCEPTION, TRIGGERING_CONDITION)1
so that the use of the Premises is substantially impaired, Tenant may terminate the Lease within 30 days after the damage or destruction and Tenant will immediately vacate the Premises.(TENANT_TERMINATION_RIGHT, TERMINATION_NOTICE_PERIOD, TRIGGERING_CONDITION)2
If Tenant vacates, Tenant is not liable for rent that would have been due after the date of termination.(RENT_LIABILITY_TERMINATION)3
Tenant may vacate the part of the Premises rendered unusable by the damage or destruction, in which case Tenant's liability for rent shall be reduced by the fair rental value of the part of the Premises that was damaged or destroyed.(PARTIAL_UNUSABILITY, RENT_ABATEMENT)4
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- Clause 5: Casualty Damage.
With reasonable promptness after discovering any damage to the Premises (other than trade fixtures), or to any Common Area or Building system necessary for access to or tenantability of the Premises, resulting from any fire or other casualty (a "Casualty"),(CASUALTY_EVENT)1
Landlord shall notify Tenant of Landlord's reasonable estimate of the time required to substantially complete repair of such damage (the "Landlord Repairs").(LANDLORD_RESTORATION_TIMELINE_NOTICE)2
If, according to such estimate, the Landlord Repairs cannot be substantially completed within 180 days after they are commenced, either party may terminate this Lease upon 60 days' notice to the other party delivered within 10 days after Landlord's delivery of such estimate.(MUTUAL_TERMINATION_RIGHT, TERMINATION_NOTICE_PERIOD, TRIGGERING_CONDITION)3
Within 90 days after discovering any damage to the Project resulting from any Casualty, Landlord may, whether or not the Premises are affected, terminate this Lease by notifying Tenant if (i) any Security Holder terminates any ground lease or requires that any insurance proceeds be used to pay any mortgage debt;(MORTGAGEE_PROCEEDS_REQUIREMENT, TRIGGERING_CONDITION)4
(ii) any damage to Landlord's property is not fully covered by Landlord's insurance policies;(UNINSURED_LOSS, TRIGGERING_CONDITION)5
(iii) Landlord decides to rebuild the Building or Common Areas so that it or they will be substantially different structurally or architecturally;(LANDLORD_REDEVELOPMENT_RIGHT, TRIGGERING_CONDITION)6(iv) the damage occurs during the last 12 months of the Term;(END_OF_TERM_DAMAGE, TRIGGERING_CONDITION)7
or (v) any owner, other than Landlord, of any damaged portion of the Project does not intend to repair such damage; provided, however, that (x) Landlord may not terminate this Lease pursuant to the preceding clauses (i), (ii), (iii) or (v) unless the Premises have been materially damaged or Landlord also exercises all rights it may have acquired as a result of the Casualty to terminate any other leases of space in the Building, and (y) Landlord may not terminate this Lease pursuant to the preceding clause (iv) unless the Premises have been materially damaged or Landlord also exercises all rights it may have acquired as a result of the Casualty to terminate any other leases of space in the Building that have less than 12 months remaining in their terms when the Casualty occurs.(LANDLORD_TERMINATION_RIGHT, TERMINATION_CONDITIONS)8
If this Lease is not terminated pursuant to this Section 11, Landlord shall promptly and diligently perform the Landlord Repairs, subject to reasonable delays for insurance adjustment and other events of Force Majeure.(LANDLORD_RESTORATION_OBLIGATION, FORCE_MAJEURE_DELAYS)9
The Landlord Repairs shall restore the Premises (other than trade fixtures) and any Common Area or Building system necessary for access to or tenantability of the Premises to substantially the same condition that existed before the Casualty, except for (a) any modifications required by Laws enacted after the Date of this Lease, and (b) any modifications to the Common Areas that are deemed desirable by Landlord, are consistent with the character of the Project, and do not materially impair access to or tenantability of the Premises.(RESTORATION_SCOPE_OBLIGATION, RESTORATION_EXCLUSIONS, RESTORATION_STANDARD)10
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- Clause 6: Casualty Damage.
In the event that the Buildings or any part thereof shall be damaged by fire or other casualty,(CASUALTY_EVENT)1
then Grantor shall use reasonable effort to reconstruct the Façade to the condition required under this Agreement.(GRANTOR_RESTORATION_OBLIGATION)2
If the Building is damaged to such an extent that Grantor determines that reconstruction of said Building is not feasible and provides Grantee with a statement from an independent engineer to the same effect,(INFEASIBILITY_DETERMINATION, DAMAGE_ASSESSMENT, TRIGGERING_CONDITION)3
then this Agreement shall be void and of no further force or effect with respect to said Building.(AGREEMENT_TERMINATION)4
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- Clause 7: Casualty Damage.
With reasonable promptness after discovering any damage to the Premises (other than trade fixtures), or to any Common Area or portion of the Base Building necessary for access to or tenantability of the Premises, resulting from any fire or other casualty (a "Casualty"),(CASUALTY_EVENT)1
Landlord shall notify Tenant of Landlord's reasonable estimate of the time required to substantially complete repair of such damage (the "Landlord Repairs").(LANDLORD_RESTORATION_TIMELINE_NOTICE)2
If, according to such estimate, the Landlord Repairs cannot be substantially completed within 180 days after they are commenced, either party may terminate this Lease upon 60 days' notice to the other party delivered within 10 days after Landlord's delivery of such estimate.(MUTUAL_TERMINATION_RIGHT, TERMINATION_NOTICE_PERIOD, TRIGGERING_CONDITION)3
Within 90 days after discovering any damage to the Project resulting from any Casualty, Landlord may, whether or not the Premises are affected, terminate this Lease by notifying Tenant if (i) any Security Holder terminates any ground lease or requires that any insurance proceeds be used to pay any mortgage debt;(MORTGAGEE_PROCEEDS_REQUIREMENT, LANDLORD_TERMINATION_RIGHT, TRIGGERING_CONDITION)4
(ii) any damage to Landlord's property is not fully covered by Landlord's insurance policies;(UNINSURED_LOSS, TRIGGERING_CONDITION)5
(iii) Landlord decides to rebuild the Building or Common Areas so that it or they will be substantially different structurally or architecturally;(LANDLORD_REDEVELOPMENT_RIGHT, TRIGGERING_CONDITION)6
(iv) the damage occurs during the last 12 months of the Term;(END_OF_TERM_DAMAGE, TRIGGERING_CONDITION)7
or (v) any owner, other than Landlord, of any damaged portion of the Project does not intend to repair such damage; provided, however, that (x) Landlord may not terminate this Lease pursuant to the preceding clauses (i), (ii), (iii) or (v) unless the Premises have been materially damaged or Landlord also exercises all rights it may have acquired as a result of the Casualty to terminate any other leases of space in the Building, and (y) Landlord may not terminate this Lease pursuant to the preceding clause (iv) unless the Premises have been materially damaged or Landlord also exercises all rights it may have acquired as a result of the Casualty to terminate any other leases of space in the Building that have less than 12 months remaining in their terms when the Casualty occurs.(TERMINATION_CONDITIONS)8
If this Lease is not terminated pursuant to this Section 11, Landlord shall promptly and diligently perform the Landlord Repairs, subject to reasonable delays for insurance adjustment and other events of Force Majeure.(LANDLORD_RESTORATION_OBLIGATION, FORCE_MAJEURE_DELAYS)9
The Landlord Repairs shall restore the Premises (other than trade fixtures) and any Common Area or Building system necessary for access to or tenantability of the Premises to substantially the same condition that existed before the Casualty, except for (a) any modifications required by Laws enacted after the Date of this Lease, and (b) any modifications to the Common Areas that are deemed desirable by Landlord, are consistent with the character of the Project, and do not materially impair access to or tenantability of the Premises.(RESTORATION_SCOPE_OBLIGATION, RESTORATION_EXCLUSIONS)10
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| Label Group | Label | Definition | Clause 1 | Clause 2 | Clause 3 | Clause 4 | Clause 5 | Clause 6 | Clause 7 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Damage Assessment | CASUALTY_EVENT | The occurrence of a casualty event that triggers the clause provisions. | Yes | Yes | Yes | Yes | Yes | Yes | Yes | |
| DAMAGE_ASSESSMENT | Assessment of the extent and nature of the damage caused by the casualty event. | Yes | ||||||||
| SUBSTANTIAL_DAMAGE_DETERMINATION | Determination that the damage is substantial enough to trigger certain provisions or rights. | Yes | Yes | |||||||
| INFEASIBILITY_DETERMINATION | Determination that repair or reconstruction is not feasible. | Yes | ||||||||
| Restoration Obligation | LANDLORD_RESTORATION_OBLIGATION | The landlord's duty to repair and restore the damaged premises. | Yes | Yes | Yes | Yes | ||||
| TENANT_RESTORATION_OBLIGATION | The tenant's duty to repair and restore certain portions of the damaged premises. | Yes | ||||||||
| GRANTOR_RESTORATION_OBLIGATION | The grantor's duty to repair and restore the damaged property. | Yes | ||||||||
| RESTORATION_SCOPE_LIMITATION | Limitation on the scope of the landlord's restoration obligation. | Yes | ||||||||
| RESTORATION_EXCLUSIONS | Items excluded from the landlord's restoration obligation. | Yes | Yes | |||||||
| Repair Timeline | REPAIR_COMMENCEMENT | The commencement of repairs by the landlord. | Yes | Yes | ||||||
| REPAIR_TIMELINE | The timeline for completing repairs and restoration. | Yes | ||||||||
| RESTORATION_TIMELINE_ESTIMATE | An estimate of the time required to complete repairs and restoration. | Yes | Yes | |||||||
| ASSESSMENT_TIMELINE | The timeline for assessing the damage and necessary repairs. | |||||||||
| Notice Requirements | TENANT_NOTIFICATION_OBLIGATION | The tenant's duty to notify the landlord of casualty damage. | Yes | Yes | ||||||
| NOTICE_REQUIREMENT | A requirement to provide notice in certain circumstances. | |||||||||
| NOTICE_TIMELINE | The timeline for providing required notices. | |||||||||
| Termination Rights | LANDLORD_TERMINATION_RIGHT | The landlord's right to terminate the lease under certain conditions. | Yes | Yes | Yes | Yes | Yes | |||
| TENANT_TERMINATION_RIGHT | The tenant's right to terminate the lease under certain conditions. | Yes | ||||||||
| MUTUAL_TERMINATION_RIGHT | The right of either party to terminate the lease under certain conditions. | Yes | Yes | Yes | ||||||
| TERMINATION_NOTICE_PERIOD | The time period for providing notice of termination. | Yes | Yes | Yes | Yes | Yes | ||||
| TERMINATION_CONDITIONS | Conditions or requirements for exercising termination rights. | Yes | ||||||||
| Rent Abatement | RENT_ABATEMENT | Reduction or suspension of rent during the repair and restoration period. | Yes | Yes | Yes | |||||
| ABATEMENT_CALCULATION | The method for calculating the amount of the rent abatement. | |||||||||
| ABATEMENT_DURATION | The duration of the rent abatement period. | |||||||||
| Insurance and Proceeds | INSURANCE_PROCEEDS | The use and allocation of insurance proceeds for repair and restoration. | ||||||||
| MORTGAGEE_PROCEEDS_REQUIREMENT | A mortgagee's right to require insurance proceeds to be applied to the mortgage debt. | Yes | Yes | Yes | Yes | Yes | ||||
| RESTORATION_COST_LIMITATION | Limitation on the landlord's restoration costs to the amount of insurance proceeds received. | Yes | Yes | |||||||
| UNINSURED_LOSS | The occurrence of a material uninsured loss. | Yes | Yes | Yes | Yes | Yes | ||||
| Liability and Exceptions | TENANT_FAULT_EXCEPTION | An exception to rent abatement or other rights if the damage was caused by the tenant's fault. | Yes | Yes | Yes | |||||
| LANDLORD_LIABILITY_EXCLUSION | Exclusion of the landlord's liability for certain losses or damages. | Yes | ||||||||
| WAIVER_OF_LEGAL_RIGHTS | Waiver of certain legal rights in favor of the provisions of the lease. | Yes | ||||||||
| Force Majeure | FORCE_MAJEURE_DELAYS | Delays in the landlord's performance due to force majeure events. | Yes | Yes | ||||||
| Miscellaneous | CONTRACTOR_ASSESSMENT | Assessment of the damage and repairs by a licensed contractor. | ||||||||
| END_OF_TERM_DAMAGE | Damage occurring near the end of the lease term. | Yes | Yes | Yes | ||||||
| LANDLORD_REDEVELOPMENT_RIGHT | The landlord's right to redevelop the property in certain circumstances. | Yes | Yes | |||||||
| AGREEMENT_TERMINATION | Termination of the agreement due to infeasibility of reconstruction. | Yes |
2022
- https://www.whiteandbright.com/legal-consideration-commercial-lease-negotiation/
- QUOTE: Consider a Casualty Clause During Lease Negotiations
- The casualty provision in a commercial lease sets forth the circumstances under which a landlord or tenant would be obligated to restore the property following a fire, flood, or other natural disaster. It can also establish a party's right to terminate the lease if a casualty event occurs. While these provisions can be complicated and do not always receive the same attention as other clauses in a commercial lease, it's vital to ensure that they are not disregarded.
- Both parties to a commercial lease should have insurance that protects their legal and financial interests if the property is damaged in a disaster. A casualty event not only can cause a landlord to incur substantial repair costs — but it can render the property unusable for a tenant, causing business disruption. A casualty clause will typically state a tenant does not have to make rent payments while restoration is underway, but this can keep a tenant tied to the property for the duration of the lease.
- When engaging in a commercial lease negotiation, parties should think about how a casualty clause may impact their interests and negotiate accordingly. Although a casualty clause may limit a tenant's right to terminate the lease if such an event takes place, the parties may consider negotiating a threshold restoration cost. A landlord and tenant might negotiate a specific cost threshold that the landlord would pay out-of-pocket before they could assert the right to term
- QUOTE: Consider a Casualty Clause During Lease Negotiations