When a disaster damages or destroys the leased premises or the building in which they are located, the consequences on the commercial lease depend in particular on the extent of the damage, its cause, the possibilities of repair as well as the provisions of the lease.
The lease may stipulate the rights and obligations of the landlord and the tenant depending on whether the damage is partial or extensive, or whether the premises are completely destroyed. It may, in particular, specify the circumstances under which the premises must be repaired or rebuilt, the applicable deadlines, and the situations that allow for termination of the lease.
When urgent and necessary repairs must be carried out to ensure the preservation or enjoyment of the premises, the tenant must allow them to be performed. Depending on the circumstances and applicable rules, however, the tenant may have certain remedies when the work substantially affects their enjoyment of the premises.
The tenant's liability for damage to the rented property depends, in particular, on the cause of the damage. The Civil Code of Québec sets out specific rules regarding losses to the rented property and, in the case of a building, damage resulting from a fire.
The insurance clauses of the lease must also be examined in order to determine the protections maintained by the parties and the allocation of certain risks.
It is therefore important that the commercial lease clearly provides for the consequences of a disaster, in particular with regard to the repairs or reconstruction of the premises, the continuation or termination of the lease as well as the other rights and obligations of the parties.