Commercial leases contain numerous provisions that impact a tenant’s business, including those addressing damage and destruction. While these clauses may seem secondary during negotiations, recent natural disasters—such as wildfires in Oregon, Hawaii, and the West Coast—highlight their critical importance. When unforeseen events occur, well-negotiated lease provisions can provide clarity and protection for both landlords and tenants.

Key considerations when negotiating damage and destruction provisions include:

• Notice of Damage – Ensure both parties are required to promptly notify each other of any damage.
• Termination Rights – Define conditions under which either party may terminate the lease, including the extent of damage and restoration timeline.
• Rebuilding Obligations – Specify which party is responsible for rebuilding, to what standard, and whether insurance proceeds will fund the reconstruction.
• Restoration & Insurance – Coordinate lease terms with insurance policies, clarify deductible responsibilities, and address potential issues with a landlord’s lender.
• Rent Abatement – Establish conditions for temporary rent reduction if the premises become unusable due to damage.
• Customization & Clarity – Adapt provisions to the specific lease type and property use while using precise language to prevent disputes.

With natural disasters posing an increasing risk, a well-negotiated damage and destruction clause is essential for protecting businesses and minimizing legal conflicts. For a deeper dive into best practices and key legal considerations, read the full article here.