In the Spotlight: Tenants Should Keep Watch for Innocuous-Appearing Provisions

Most leases provide for a rent abatement in the event of a casualty to either the building or leased premises that renders the leased premises unfit for the tenant's use until the casualty damage has been repaired. At first glance, the only items to be negotiated in such provisions are those that clarify what portion of the building or premises ' as the case may be ' must be affected in order to provide for an abatement, how quickly the landlord is obligated to restore the damage, and under what circumstances the parties may terminate the lease. There really should be no discussion as to whether or not the tenant is entitled to an equitable rent abatement, but some lease provisions limit the abatement to those instances in which the tenant is not responsible for the casualty. The way this onerous provision is usually drafted, it appears to be innocuous boilerplate. It is an unfair shifting of the risk of casualty from the landlord to the tenant, particularly in situations where (as in most net leases) the tenant reimburses the landlord for its proportionate share of the landlord's casualty insurance premiums (and sometimes even deductibles). Most landlords will readily delete the provision when challenged, but the tenant's counsel must be alert to request such a deletion.

A related provision that also should be stricken by savvy tenants is the similarly innocuous-appearing provision requiring the tenant to return the leased premises to the landlord at the end of the term “in the same condition as existed at the beginning of the lease term, reasonable wear and tear and casualty damage not caused by the acts or omissions of the tenant excepted.” This provision also unfairly shifts the casualty risk to the tenant and should not be acceptable to a tenant.

Most leases provide for a rent abatement in the event of a casualty to either the building or leased premises that renders the leased premises unfit for the tenant's use until the casualty damage has been repaired. At first glance, the only items to be negotiated in such provisions are those that clarify what portion of the building or premises ' as the case may be ' must be affected in order to provide for an abatement, how quickly the landlord is obligated to restore the damage, and under what circumstances the parties may terminate the lease. There really should be no discussion as to whether or not the tenant is entitled to an equitable rent abatement, but some lease provisions limit the abatement to those instances in which the tenant is not responsible for the casualty. The way this onerous provision is usually drafted, it appears to be innocuous boilerplate. It is an unfair shifting of the risk of casualty from the landlord to the tenant, particularly in situations where (as in most net leases) the tenant reimburses the landlord for its proportionate share of the landlord's casualty insurance premiums (and sometimes even deductibles). Most landlords will readily delete the provision when challenged, but the tenant's counsel must be alert to request such a deletion.

A related provision that also should be stricken by savvy tenants is the similarly innocuous-appearing provision requiring the tenant to return the leased premises to the landlord at the end of the term “in the same condition as existed at the beginning of the lease term, reasonable wear and tear and casualty damage not caused by the acts or omissions of the tenant excepted.” This provision also unfairly shifts the casualty risk to the tenant and should not be acceptable to a tenant.