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Over the past few weeks parts of Yorkshire and Cumbria have been badly affected by flooding following heavy rain over the Christmas period. This will have left many local businesses unable to trade as a result of the flood damage caused to their property.

Most business owners will be concerned about getting up and running again as soon as possible, but in the meantime any issues regarding the payment of rent, cost of repair of the property and belongings and insurance need to be considered as soon as possible.

If business owners are not able to get up and running straight away and have to vacate their premises, they will need to understand how this will impact on their obligations under the lease and who is responsible for insuring and restoring the premises.

Dealing with the immediate problems caused by the flooding will naturally be the landlord’s and tenant’s first priority, however, if the obligations under the lease of the premises are not adhered to there is the possibility of significant longer term implications.

Issues to consider

Tenants should check their lease to see who is responsible for insuring the property and what risks need to be insured against. Usually insuring the property would be the landlord’s responsibility under the lease. If this is the case then tenants should be contacting their landlord as soon as possible to discuss the potential insurance claim.

From the landlord’s point of view, they need to check the wording of the insurance policy to ensure that the insurance will cover any loss of rent. Most leases will contain a clause allowing suspension of all or some of the rent whilst the premises cannot be used.

Tenants should ensure that they check their lease for a provision that states they are entitled to suspend rent payments before they stop paying rent whilst they are unable to use the premises. This is important because if there is no such clause and the tenant stops paying rent, the landlord may be able to forfeit the lease.

Most leases will state how the landlord is to apply any insurance monies received, when rent will become payable again, what happens in the event of a dispute and whether the damage caused may entitle the landlord to terminate the lease or the tenant to walk away without further liability. If the landlord is not obliged to insure against flood, landlords and tenants need to understand whether the lease deals with uninsured risks and identify who is responsible for repair.

In addition to property insurance, tenants should check their own insurance policies relating to contents and stock to ensure that the costs of any losses are covered under their policy.

If tenants are seeking alternative premises whilst their current premises are repaired then they should be careful about entering into a second lease and creating a duplication of rent payments. A temporary licence to occupy instead of a new lease may be a way round this, but if tenants are concerned they should ensure they seek legal advice before signing any agreements for temporary premises.

Both landlord and tenant should consider additional security measures if the business premises have to be left vacant as a result of the flood damage. These costs may be covered under the policy of insurance and this should be checked.

The information given above is a brief overview of the issues for landlords and tenants to consider in light of the recent flooding. It is not intended to form legal advice.

If you are a landlord or tenant and you are concerned about your obligations under your lease then please contact our commercial property team on 01484 821 500 or email jane.holroyd@ramsdens.co.uk.

In association with Calderdale Flood Aid we are hosting a free legal clinic for those directly affected by the flood at the White Lion Hotel in Hebden Bridge on Wednesday 13th January from 6-8pm. for more information email cfalegalclinic@yahoo.com.