Flood Damage – Your rights under a commercial or retail lease
With the current unprecedented weather events affecting Southeast Queensland and Northern New South Wales it is clear that many commercial and retail premises are being damaged by flood water.
So who is responsible for repairing flood damage to the property?
Generally speaking it will depend on the terms of your lease and you should carefully review the lease clauses relating to maintenance, repairs and also the indemnity and release provisions. These clauses should provide guidance on which party is responsible for repairing the damage.
Where the lease over the property is a retail lease, if the structure of the premises has been damaged as a result of the floods, then it is generally the lessor’s responsibility to repair the damage.
For commercial leases, if the lease does not clearly state which party is responsible for repairing or rectifying damages, then it may not be the lessor’s responsibility to pay for flood repairs. The lessee may be required to make certain repairs as a result of flood damage. It will depend on the extend and type of damage.
Who is responsible for insuring the premises for flood or storm damage?
It will depend on the terms of your lease as commercial leases allow a lessor to require the lessee to obtain specific insurance coverage for the property.
The lease may not specifically require flood insurance to be obtained. You should then consider whether you are adequately covered by your existing insurance policy.
If you are covered for flood or storm damage you may not be covered for everything. You should review your insurance policy carefully to see the set terms of storm or flood cover. For example, your insurance may not include coverage for damage to stock or loss of data.
You should speak to your insurer to clarify your level of coverage.
To assist in this process, you should keep records of the damage either by photo or video. It might be helpful to start a list that details the damage to each item or area of the property. If you do lodge a claim against your insurance you will need this documentation to support your claim.
Other things to consider:
In addition to clarifying who is responsible for conducting or paying for the repairs you should consider what other rights the parties may have whilst the property remains damaged such as:
- Does the lease contain provisions entitling the lessee to pay reduced rent?
- Does the lease contain provisions allowing the lessor to terminate the lease as a result of the damage?
- Are there time limits that apply for repairs or for the lessor to terminate the lease?
If your property has been affected by flood damage you should speak to a solicitor to review your lease and provide you with advice on the rights and obligations of the parties regarding flood damage.
Did you know
There are a number of disaster relief grants being established by the Government.
Our dedicated commercial and property team can provide you with timely advice and guidance on how to protect and enforce your rights and assist you to navigate this difficult time. We can also assist you to review whether you may qualify for a disaster relief grant and assist you with the application process.
McLaughlins Lawyers have been assisting both Lessors and Lessee’s in Queensland for over 60 years. We understand how the Queensland property system works. Call or email Teresa Kearney or Pip Davis on (07) 5591 5099 and [email protected] for help.
McLaughlins Lawyers are your experienced and trusted Gold Coast lawyers.
Author: Pip Davis
Directors: Ian Kennedy
Date: 4 April 2022
Related Tag:- Community Law Firm