TERMINATING A LEASE DUE TO PREMISES DAMAGE

THE PROBLEM

Most leases have a clause as follows: “In the event the premises are condemned by a governmental authority of destroyed due to fire, flood or other acts of god, this lease shall terminate as of the date of the condemnation or destruction”. Many leases go on to say that in the event of destruction or condemnation, the resident’s rent will be abated until such time as the premises are ready for the resident to reoccupy. These clauses look good on the surface and definitely serve an important purpose, but there is a serious flaw. What happens if the premises are “damaged” rather than destroyed? Do you have to house the resident? Do you have to make a repair while the resident is living in the unit? Can you make the resident leave permanently? Should you put the resident in another unit? All these questions can be answered and the problems solved easily, if and only if the lease has proper wording. Fires, hurricanes and floods will happen. It is not a matter of if they will happen but when. Are you ready?

FLORIDA LAW AND DAMAGE OR DESTRUCTION OF THE PREMISES

Florida law somewhat addresses the issue of damage or destruction as follows: FS 83.63 Casualty damage: ”If the premises are damaged or destroyed other than by the wrongful or negligent acts of the resident so that the enjoyment of the premises is substantially impaired, the resident may terminate the rental agreement and immediately vacate the premises. The resident may vacate the part of the premises rendered unusable by the casualty, in which case his liability for rent shall be reduced by the fair rental value of that part of the premises damaged or destroyed. If the rental agreement is terminated, the manager shall comply with s. 83.49(3). Unfortunately, that does not do the manager much good. As you can see, this addresses the resident’s rights in the event of damage or destruction, rather than the manager’s rights.

THE PROPERTY IS SUBSTANTIALLY DAMAGED – CAN WE TERMINATE THE LEASE? -- Unfortunately, Florida law is not clear on this, so we must look to the lease. If we do not have a clause in the lease which allows for the termination of the lease at the manager’s option in the event of damage to the premises, the manager may be stuck having to make a repair while the resident is in the unit, and this may be unpractical or downright dangerous to the resident or other persons, creating a high liability for manager. For example, the resident has a fire and of course blames it on the proverbial “defective stove”. Since the premises may not be actually “destroyed”, the manager may be under a legal obligation to repair the kitchen while the resident is in place or be prohibited for removing the resident due to the fire. The same thing can happen in the event of a flood or worse yet, in the event of a serious mold situation. If we have a proper lease clause, this problem can be solved. Examine the lease clause that follows:

If for any reason the premises are condemned by any governmental authority, or damaged through fire, flood, mold, act of God, nature or accident, this lease shall cease and shall terminate at MANAGER'S option as of the date of such condemnation or destruction, and RESIDENT hereby waives all claims against MANAGER for any damages suffered by such condemnation or destruction

As you can see, this clause enables the manager to have the option to terminate the tenancy and force the resident to vacate the premises.

THE PROPERTY IS DESTROYED – CAN WE TERMINATE THE LEASE? - It is fairly clear that this clause will enable the manager to terminate the lease in the event the premises are destroyed. Will the part of the clause attempting to relieve the manager of liability hold up in court? That is a big unknown, but what we do know is most likely we will be able to deal with the immediate problem of removing the resident from the unit.

WHERE DOES THE RESIDENT GO? - Based on experience and horror stories, we urge the manager never to put the resident into another unit, the corporate unit or the model unit if one is available. We have seen situations where the resident fails to vacate the original unit and the model or corporate unit, fails to pay rent, holds both units hostage or tries to make you pay for damaged personal belongings, and will not vacate until you do so. If you ever have the need to put up the resident, our first recommendation is to place them in a hotel for one or two days, making it clear to them and the hotel that this is only for a fixed short period of time. If you decide to put the resident in another unit on-site, we strongly recommend that you use a TEMPORARY HOUSING ADDENDUM which clearly states that the housing is temporary, lays out all the terms, and has a fixed date when the resident must vacate. Never should you put a resident in another unit without a TEMPORARY HOUSING ADDENDUM.

HOW DO WE TERMINATE THE LEASE? - The resident will need to be given a lease termination notice and most likely a Seven Day Notice of Termination. We urge you to immediately contact your attorney when dealing with these types of situations, and get the attorney involved early on.