Have you ever wondered what might happen if a natural disaster – such as this past week’s floods in Durban – causes such severe damage that your tenant can no longer occupy the property? Are you obliged to find alternative accommodation for your tenant? Must they continue paying the rent? And is anyone liable for damage to property?
It is very important to ensure that your lease agreement contains a force majeure clause to deal with this eventuality. A force majeure is a chance occurrence or unavoidable accident that frees both landlord and tenant from liability or obligation when circumstances beyond their control prevent them from fulfilling their contractual obligations. Some examples include acts of God, such as an earthquake, flood or volcanic eruption or situations of war, strike or riot. For the duration of the disaster, a landlord would not be obliged to provide accommodation and the tenant would not be obliged to pay rent.
There are two main ways that lease agreements address such extraordinary events: either by terminating the agreement or by proposing a remedy, for example that each party insures themselves against loss or damage. By automatically terminating the agreement, neither party can claim for damages. Whether it appears in the lease agreement or not, we strongly recommend that both landlord and tenant insure the property and contents against damage or loss in the face of disaster.
It is important that the landlord initiates repairs to the damaged property as soon as possible to return the property to a habitable condition.
If the lease agreement does not specifically deal with these catastrophe situations, then normal civil case law will apply, and either party will have to pursue the other for their damages. The laws of damages and liability are very complex and proving liability and quantifying damages can be a daunting legal challenge, very expensive and time-consuming. It is best to avoid this through proper up-front agreement as described above
- Make sure your lease agreement contains a clause that deals with disaster situations
- Make sure you have adequate insurance for your property and inform your tenant that she is responsible for insuring her furniture and possessions
- Be sensible in time of crisis and remain calm and constructive in your engagement with the other party.