Reading time: 3 minutes

A flood can cause significant damage to your business. In addition to physical damage to the premises, there’s also the added stress of trying to operate your business and managing the repairs. But what happens if you are leasing? Who pays for these repairs? We look at who pays for flood repairs in both retail and commercial leases as well as what steps you can take to ensure that you protect yourself in the unfortunate event that you are subject to flooding.

First Steps

You should first check your insurance policy if your business has flooded. The lessor’s building insurance or the tenant’s content insurance should cover flooding by a natural cause (such as a storm). If you are leasing your premises, you should also check you lease to see who pays for repairs. Whether you have a retail or a commercial lease will determine what you have to pay. Although there are some key differences between a retail and commercial lease, you can start by asking yourself the following questions:

  • Do you run a shop which sells goods or services?
  • Are you part of a shopping centre?
  • Did you receive a disclosure statement when you signed the lease?

If you answered yes to all of these questions, it is likely that you will be a tenant of a retail lease.

Retail Leases

Under a retail lease, a tenant should check the ‘maintenance and repair’ clause as well as the ‘indemnity and release’ provision to see who is responsible for flood repairs. In most circumstances, flooding which causes structural damages will be the landlord’s responsibility. However, state legislation governs retail leasing and there may be slight differences depending on where you live.

You also have additional rights under your state’s retail lease legislation. For example, under the Retail Leases Act 2004 (NSW), you can terminate the lease if the landlord does not repair the damage within a reasonable amount of time. If you cannot resolve your dispute with the landlord, parties can engage in mediation. Where mediation fails, you can lodge a claim in your relevant tribunal. You may include lawyers in the tribunal process, but often that will require permission from the relevant tribunal.

Commercial Leases

If you are a tenant in a commercial lease, you should check the ‘maintenance and repairs’ clause in your lease as well as the ‘indemnity and release’ provisions. These clauses will state what you pay for regarding flooding. It is important to note that where the contract is silent on this, it will not always be the lessor’s responsibility to pay for the flood repairs.

If you do not have this clause in your lease, you will be responsible for making small repairs but depending on what is stated in the clauses mentioned above, you could also be liable for structural repairs.

This clause can cause disputes between tenants and landlords in commercial leases, and you should ensure you understand what damages you must pay before you sign the contract.

Key Takeaways

  1. Ensure that you have insurance for your premises to cover things that can cause major damage like flooding;
  2. Know whether you have a retail or commercial lease; and
  3. Have a lawyer review your lease to find out whether you are responsible for repairs and when your landlord is responsible.

If you have any questions or need assistance with a claim for flood repairs, get in touch with our team of leasing lawyers on 1300 544 755.

Webinars

How to Sponsor Professionals For Your Healthcare Organisation

Thursday 24 March | 11:00 - 11:45am

Online
Plug skill shortages in your healthcare organisation by sponsoring professionals from overseas. Learn how in our free webinar.
Register Now

Everything You Need to Know about SaaS Agreements

Thursday 7 April | 11:00 - 11:45am

Online
Understand which contracts will protect your SaaS contract from risk, and how. Register for free today.
Register Now

What to Consider When Buying a Tech or Online Business

Wednesday 13 April | 11:00 - 11:45am

Online
Learn how to get the best deal when buying a tech or online business. Register for our free webinar today.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Wednesday 27 April | 11:00 - 11:45am

Online
If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

Rogue Directors and Business Divorces: How to Remove a Director

Thursday 28 April | 11:00 - 11:45am

Online
Removing a board director is not simple. Join our free webinar to learn how to handle rogue directors. Register today.
Register Now

Employment Essentials for Tech Businesses

Thursday 5 May | 11:00 - 11:45am

Online
Protect your tech business and your employees by understanding your employment legal obligations. Register for our free webinar today.
Register Now

How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Online
Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer