Business interruption during your lease

As a tenant and a business owner you want to  protect yourself from potential risks that can interrupt your business.  Broken building equipment as well as faulty building equipment may compromise you ability to run your business. What happens when your business is interrupted during your lease term?  In Central Texas is can be  caused from extreme weather or the equipment  that is not serviced for a long period of time.

Perhaps the HVAC is on it’s last leg and needs replaced. If there is any property damage it will keep your  business from operating correctly. These types of instances would include hail storms, wind damage, fire etc.

What is in a lease to protect my business?

Most  but not all leases “standard” office leases drafted by the landlord state that if essential building services such as  (electricity, HVAC, etc.) are interrupted,  your lease  payments continue as if nothing has gone wrong.  Tenants should be aware of this and negotiate this to make sure they are covered and not stuck  since the office you are leasing has services incorporated into the space that are a fundamental part of the lease and the landlord should be responsible , or at least attain part of the risk of business interruption.

 

Solutions for service interruption?

Tenants should  negotiate a provision in their lease which provides  some type of relief in the case of business interruption that lasts more than 3 to 5 days. If there is a service interruption that is much longer then a  cancellation of the lease may be in order if the issue lasts more than 60 to 180 days.

One way to ask for a concession is by asking for it to be in the form of rent abatement. Most landlords will  be acceptable to these modifications to a tenant’s lease. The key element is that the provision should  give the landlord a reasonable amount of time to repair and restore essential services. But if the business owner does not raise this issue in the negotiation, they are  unlikely to receive any concessions  for a long period of service disruption.  Keep in mind, free rent and lease termination for extended service interruptions are fairly common and generally acceptable practices.