Thankfully the fires from a few weeks ago are out but I fear it’s going to be a long fire season. Take a look at the accompanying picture I took of a building along Palomar Airport Road in Carlsbad damaged by the fire. Clients in that area who witnessed the fire commented on how awe inspiring and destructive the power of nature can be.Why am I showing you a fire damaged building? Events of this type should make us pause and reflect on how prepared our businesses are to handle catastrophes. As it relates to your commercial lease it’s a good idea to periodically review the document for two reasons; one, make sure you have the appropriate level of insurance protection, and two, compare your situation to the current market conditions to see if there are areas to potentially reduce occupancy costs.
At Botticelli Realty Advisors we provide lease review services whether you are an existing client or not, and it is free of charge. This is a good idea to do if you’re more than half way through a long term lease, and definitely after an event like the recent fires.
How many of you remember the insurance clause in your lease stating the type of coverage you need to carry during the term? Usually right after the insurance clause is the section addressing damage or destruction of the property. This clause describes what happens in the event of destruction of premises by fire (or other cause) and details what happens to the lease if a certain percentage of the premises has been destroyed or is not habitable. Continue reading