Guy de la Porte of Airport Property Specialists, recently witnessed a series of events which caused a substantial financial loss to the Owner of a property in an Industrial area.
The property was subject to a lease agreement at the time when the tenant vacated the property with the lease still valid for a further 18 months. While the tenant was in negotiations with the Landlord about a possible release fee for early termination, the rental payments were kept up to date by the Tenant, thereby tacitly acknowledging their obligations in terms of the lease.
The Tenant removed all movable items, stock and equipment from the property and although there was no guarding service, the property was fitted with an intruder alarm system, linked to an armed response. Shortly after the Tenant vacated the premises, there were incidences of break-ins and vandalism. During these break-ins, the alarm was ripped out and disabled.
It so happened that the Owners of the building took a decision some time ago to cancel the Theft Cover previously specified in their Insurance Policy as they did not have any movable items in the premises which could be stolen.
The Tenant on the other hand, only insured the contents of the premises as he has no obligation to maintain the structure of the building.
During the various incidents of vandalism, all fixed items of value was either removed or damaged beyond repair. These included all light fittings, steel door frames, electrical and network cables, burglar bars, suspended ceiling tiles etc.
The total cost of repairs was estimated to be in excess of R1m with neither the Owner nor the Tenant being able to successfully claim for any of the stolen items. The damage rendered the property not rentable and in a non-compliant state. Furthermore, the Owners could not sell the property for it’s market value and faced a possible loss of R1m.
The only remedy available to the Landlord was to sue the Tenant for damages.
Our advice to all property Owners is to rather over insure than under insure and to perhaps review their current insurance cover.