Rent Abatement Due to Casualty Clause

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A Rent Abatement Due to Casualty Clause is a casualty-related clause that allows for a reduction or suspension of rent obligations when the leased premises are damaged or rendered unusable due to a casualty event.

  • Context:
    • It can (typically) be activated by specific Triggering Events, such as fire, flood, or other disaster, that render all or part of the premises unusable for the tenant's intended purpose.
    • It can (often) calculate the rent reduction proportionally, based on the rentable square footage or percentage of the premises that has become unusable, to ensure fairness for both parties.
    • It can specify the Abatement Period, which usually begins on the date of the casualty or when the tenant ceases to occupy the premises, and ends when the landlord substantially completes the necessary repairs or restoration, to provide clarity on the duration of the abatement.
    • It can exclude rent abatement if the casualty is caused by the tenant's negligence or willful misconduct, to protect the landlord from bearing the financial consequences of the tenant's actions.
    • It can condition the abatement on the landlord receiving insurance proceeds for rental interruption, to ensure that the landlord's financial obligations are met through their insurance coverage.
    • It can designate the abatement as the tenant's sole remedy, precluding other claims for direct, indirect, or consequential damages, to limit the landlord's potential liability arising from the casualty event.
    • It can allow partial rent abatement if the tenant is able to use a portion of the premises during restoration, to account for situations where the tenant can continue some operations while repairs are ongoing.
    • It can require the tenant to maintain business interruption insurance to cover their own losses during the abatement period, further mitigating the financial impact on both parties.
    • It can be subject to local laws and regulations governing commercial leases and tenant rights, which may vary by jurisdiction.
    • ...
  • Example(s):
    • Landlord and Tenant agree that, if the Casualty was not the result of the gross negligence or willful misconduct of Tenant or Tenant's employees, contractors, licensees, or invitees,(TENANT_FAULT_EXCLUSION)1 Tenant shall be provided with a proportionate abatement of Rent based on the Rentable Square Footage of the Premises rendered unusable (due to physical damage to the Premises or Base Building Systems or the unavailability of access to the Premises) and not used by Tenant,(PROPORTIONAL_ABATEMENT, UNUSABLE_AREA, PHYSICAL_DAMAGE, INACCESSIBILITY)2 but only to the extent that Landlord is reimbursed from the proceeds of rental interruption insurance purchased by Landlord as a part of Operating Expenses.(INSURANCE_PROCEEDS_CONDITION)3 That proportional abatement, if any, shall be provided during the period beginning on the later of (a) the date of the Casualty or (b) the date on which Tenant ceases to occupy the Premises and ending on the date of Substantial Completion of Landlord's restoration obligations as provided in this Article 15.(ABATEMENT_PERIOD, CASUALTY_DATE, TENANT_VACANCY_DATE, RESTORATION_COMPLETION)4 Subject to section 15.4, the Rent abatement provided in this section 15.5 is Tenant's sole remedy due to the occurrence of the Casualty.(SOLE_REMEDY)5 Landlord shall not be liable to Tenant or any other person or entity for any direct, indirect, or consequential damage (including but not limited to lost profits of Tenant or loss of or interference with Tenant's business), whether or not caused by the negligence of Landlord or Landlord's employees, contractors, licensees, or invitees, due to, arising out of, or as a result of the Casualty (including but not limited to the termination of the Lease in connection(LANDLORD_LIABILITY_EXCLUSION, DIRECT_DAMAGES, INDIRECT_DAMAGES, CONSEQUENTIAL_DAMAGES, LOST_PROFITS, BUSINESS_INTERFERENCE)6
    • If, as a result of any Casualty Damage, Tenant is unable to gain access to or conduct business in the Premises,(TRIGGERING_EVENT, INACCESSIBILITY, BUSINESS_INTERRUPTION)1 Tenant shall be entitled to a proportionate abatement of Base Rent and any Expense Increases from the date of the Casualty Damage through the date the Lease is terminated or the earlier of (i) the date Tenant occupies the Premises; or (ii) the date Landlord's and Tenant's Restoration Work is Substantially Completed (or, in the event of any Tenant Delay, the date all such work would have been so completed in the absence of such Tenant Delay).(PROPORTIONAL_ABATEMENT, BASE_RENT, EXPENSE_INCREASES, ABATEMENT_PERIOD, CASUALTY_DATE, LEASE_TERMINATION, TENANT_OCCUPANCY, RESTORATION_COMPLETION, TENANT_DELAY)2 The amount of such abatement shall be equal to the Base Rent and Expense Increases payable during the restoration period, multiplied by a fraction, the numerator of which is the RSF of that portion of the Premises which is rendered unusable (including, without limitation, due to the inability to gain access thereto or to conduct business therein) by the Casualty Damage, and the denominator of which is the RSF of the entire Premises.(ABATEMENT_CALCULATION, BASE_RENT, EXPENSE_INCREASES, RESTORATION_PERIOD, UNUSABLE_AREA, INACCESSIBILITY, BUSINESS_INTERRUPTION, TOTAL_PREMISES_AREA)3 Except as otherwise expressly provided in this Lease, Tenant's right to an abatement of Rent as described in this Section 16.5 shall be Tenant's sole remedy in connection with any Casualty Damage described in this Article 16 and the repair thereof, and Tenant shall have no claim for, and hereby releases Landlord and all Landlord Parties from all Claims arising out of any Casualty Damage to the Premises, the Building or the Project or the repair or restoration thereof, including any cost, loss or expense resulting from any loss of use or any inconvenience or annoyance thereby occasioned.(SOLE_REMEDY, LANDLORD_RELEASE, CASUALTY_DAMAGE, REPAIR_AND_RESTORATION, LOSS_OF_USE, INCONVENIENCE, ANNOYANCE)4
    • Landlord and Tenant agree that, if the Casualty was not the result of the negligence or willful misconduct of Tenant or Tenant's employees, contractors, licensees, or invitees,(TENANT_FAULT_EXCLUSION)1 Tenant shall be provided with a proportionate abatement of Rent based on the Rentable Square Footage of the Premises rendered unusable (due to physical damage to the Premises, the Building Systems or the unavailability of access to the Premises) and not used by Tenant.(PROPORTIONAL_ABATEMENT, UNUSABLE_AREA, PHYSICAL_DAMAGE, BUILDING_SYSTEMS_DAMAGE, INACCESSIBILITY)2 That proportional abatement, if any, shall be provided during the period beginning on the later of (a) the date of the Casualty or (b) the date on which Tenant ceases to occupy the Premises and ending on the date of Substantial Completion of Landlord's restoration obligations as provided in this Article 16.(ABATEMENT_PERIOD, CASUALTY_DATE, TENANT_VACANCY_DATE, RESTORATION_COMPLETION)3 Subject to Section 16.4, the Rent abatement provided in this Section 16.5 is Tenant's sole remedy due to the occurrence of the Casualty.(SOLE_REMEDY)4 Landlord shall not be liable to Tenant or any other person or entity for any direct, indirect, or consequential damage (including but not limited to lost profits of Tenant or loss of or interference with Tenant's business), whether or not caused by the negligence of Landlord or Landlord's employees, contractors, licensees, or invitees, due to, arising out of, or as a result of the Casualty (including but not limited to the termination of the Lease in connection with the Casualty).(LANDLORD_LIABILITY_EXCLUSION, DIRECT_DAMAGES, INDIRECT_DAMAGES, CONSEQUENTIAL_DAMAGES, LOST_PROFITS, BUSINESS_INTERFERENCE)5
    • Landlord and Tenant agree that Tenant's Rent shall be fully abated during the period beginning on the later of (a) the date of the Casualty or (b) the date on which Tenant ceases to occupy the Premises and ending on the date of substantial completion of Landlord's restoration obligations as provided in this Article 14 ("Abatement Period").(FULL_ABATEMENT, ABATEMENT_PERIOD, CASUALTY_DATE, TENANT_VACANCY_DATE, RESTORATION_COMPLETION)1 If, however, Tenant is able to occupy or does occupy a portion of the Premises, Rent shall be abated during the Abatement Period only for the portion of the Premises not able to be occupied by Tenant.(PARTIAL_OCCUPANCY, PARTIAL_ABATEMENT, UNUSABLE_AREA)2 Subject to Section 14.4, the Rent abatement provided in this Section 14.5 is Tenant's sole remedy due to the occurrence of the Casualty.(SOLE_REMEDY)3 Landlord shall not be liable to Tenant or any other person or entity for any direct, indirect, or consequential damage (including lost profits of Tenant or loss of or interference with Tenant's business), whether or not caused by the negligence of Landlord or Landlord's employees, contractors, licensees, or invitees, due to, arising out of, or as a result of the Casualty (including but not limited to the termination of the Lease in connection with the Casualty).(LANDLORD_LIABILITY_EXCLUSION, DIRECT_DAMAGES, INDIRECT_DAMAGES, CONSEQUENTIAL_DAMAGES, LOST_PROFITS, BUSINESS_INTERFERENCE)4 Tenant agrees to maintain business interruption insurance in amounts and with coverage no less than that required by Section 13.7.2 to provide coverage regarding such matters.(TENANT_INSURANCE_REQUIREMENT, BUSINESS_INTERRUPTION_INSURANCE)5.
    • ...
  • Counter-Example(s):
    • A Force Majeure Clause, which may excuse a party's performance due to events beyond their control but does not necessarily provide for rent abatement.
  • See: Force Majeure Clause, Casualty Clause, Landlord's Restoration Obligations, Rental Interruption Insurance, Business Interruption Insurance, Commercial Lease Law.

References

2024

Category Label Sentence 1 Sentence 2 Sentence 3
Abatement Calculation ABATEMENT_CALCULATION Not Present Present Not Present
PROPORTIONAL_ABATEMENT Present Present Present
BASE_RENT Not Present Present Present
EXPENSE_INCREASES Not Present Present Not Present
Casualty and Restoration ABATEMENT_PERIOD Present Present Present
CASUALTY_DATE Present Present Present
TENANT_VACANCY_DATE Present Present Present
RESTORATION_PERIOD Not Present Present Not Present
RESTORATION_COMPLETION Present Present Present
Usability and Access UNUSABLE_AREA Present Present Present
PHYSICAL_DAMAGE Present Not Present Present
INACCESSIBILITY Present Present Present
INSURANCE_PROCEEDS_CONDITION Present Present Present
Tenant Responsibility TENANT_FAULT_EXCLUSION Present Not Present Present
BUSINESS_INTERFERENCE Present Not Present Present
Landlord Liability and Remedies SOLE_REMEDY Present Present Present
LANDLORD_LIABILITY_EXCLUSION Present Present Present
DIRECT_DAMAGES Present Not Present Present
INDIRECT_DAMAGES Present Not Present Present
CONSEQUENTIAL_DAMAGES Present Not Present Present
LOST_PROFITS Present Not Present Present
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