How do I terminate a commercial lease when there has been damage to the office space?

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on May 3, 2015 in Business Transactions

Q.:  I have a commercial lease and a flood in the building made my office space completely unusable. While I found temporary office space in a physical therapy office, it is less than ideal and not as comfortable for my patients. I also cannot find my own office space to rent month-to-month—most places want me to sign a 1 year commercial lease. The landlord promises to repair the office space, but is waiting for the insurance company to give them money first … and repairs could take another 2-3 months. How long am I obligated to wait?

 

A.:  Commercial leases usually specify how long you have to wait before you (the tenant) can terminate the commercial lease due to circumstances (like flood, fire, etc.) that render the office space unusable.  That can depend on whether the office space is truly unusable or only partially unusable, in which case you may be entitled to a partial rent abatement. Unfortunately, commercial leases are usually written to favor the landlord, so time frames as long as 6 months are not uncommon.  [Note to self: that’s why business interruption insurance can be such a handy way of stemming the “red ink” tide should a major disaster—like a flood—occur and disrupt your business].

 

Depending on how long you have left on your commercial lease, the landlord may be willing to negotiate a termination, if there’s the prospect of bringing in a higher-paying tenant to take the office space once the repairs are completed.  Either way, review your commercial lease terms with a real estate attorney to determine your options.

 

What other law questions do you have about commercial leases and office space?

 

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