The need to be prepared for the storm season will be front of mind for many Marinas. Most marinas will have systems and plans in place to minimise property damage, the risk of accidents and injuries as well as the loss of business that storms can bring.
What might not be front of mind for marinas is how storms might affect both the terms and conditions for both seabed leases granted to a marina by government bodies (head - lease) as well as the leases granted by marinas to berth owners (berthing agreement).
The following are a few common lease provisions that marinas should be aware of:
Head – leases usually require that where significant time is left under the term of the lease that the tenant marina will be required to repair damage to the marina arising from storms. This obligation may include the requirement to fully rebuild the marina, or may allow the marina to surrender the lease. These leases might also impose obligations on the landlord to repair certain infrastructure such as bund walls in manmade harbours. In respect of berthing agreements, berth owner obligations are usually limited to repairing any damage caused to the marina by its own wilful or negligent actions or inactions.
Abatement refers to the suspension of the obligation to pay rent for premises in circumstances where the premises are destroyed or damaged, so as to render them unfit for occupation and use by the tenant. Abatement provisions might also extend to instances where the premises are otherwise rendered inaccessible or unusable as a result of an event or where services are not available.
Appropriate abatement provisions should be included in each lease dealing with potential events of damage/destruction. Marinas should ensure that they understand the extent to which their abatement provisions suspend obligations under a lease such as covenants to keep the premises in good repair, pay rent or pay outgoings.
If a lease is silent on the issue of abatement statutory rights often exist under state legislation.
Force Majeure / Termination
Force Majeue refers to damage or destruction that arises due to circumstances outside of human control. Where a force majeure events occurs the landlord or tenant may have the right terminate or surrender a lease. These provisions usually also deal with whether or not a party is entitled to compensation in connection with the termination or surrender of the lease due to a force majeure event.
Marinas should check their leases to confirm that the terms of their policies are adequate with respect to both the scope and value of the coverage. The 2011 Queensland floods highlighted that "flood" insurance for example can differ depending on the insurance policy and there were marinas that had insurance claims either rejected or significantly reduced.