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Lease Rights Following the Flood: Casualty Provisions

The flood has affected many of our neighbors, including businesses.  While flood insurance or business interruption insurance may be helpful to some property owners and businesses, almost all landlords and tenants have provisions that relate to casualties in their leases.  The water and flood damage of the magnitude suffered in Middle Tennessee almost certainly qualifies as a casualty.

The rights of landlords and tenants under these casualty provisions generally are independent of insurance and liability provisions, and these casualty provisions will help guide the parties’ next steps, regardless of whether the property is determined to be a total loss or not. Many times, these casualty provisions give landlords the sole right to determine whether the lease will continue post-casualty (i.e., once flood waters subside from the property).  The landlord usually has some amount of time to repair and/or rebuild, and if the repair/re-build happens within a certain amount of time, the lease will continue.  If repair/re-build cannot happen on the given timetable, the lease may terminate.  This is good for landlords because it affords some measure of control over their property.

The good news for tenants is that many leases allow for rent abatement during the time that the property is unusable.  So, from the time water damage or flood waters forced the tenant from the leased property until the time repair/re-build is completed, the tenant may not have to pay rent.

Some casualty provisions are short and straightforward, and some are complex.  Always consult your lease if you have questions, and seeking legal advice may be helpful.  Most casualty provisions may be reviewed quickly and efficiently.
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