Managing Risk and Critical Components of Disaster Planning

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How shopping center owners can prepare for an emergency response and be prepared for unforeseen disasters.

 

JerryNelsonBlogIn today's world, commercial property owners encounter a multitude of risks. Whether it's the greater frequency of severe weather events, planning for an emergency response in light of the recent terror attack at a shopping center in Kenya, or some unforeseen force majeure, landlords/owners/developers need to ensure that they prepared to respond to disasters appropriately.

The recent shooting at the largest shopping mall in New Jersey, the Garden State Plaza Mall in Paramus, is just the latest example that highlights the need for commercial property managers and owners to have established disaster plans in place.

As a disaster is unfolding, probably the most important aspect of any disaster response plan will focus on communication. It is imperative that those responsible for managing commercial properties have spent time to know the local officials that will ultimately be taking charge of a disaster scene. Knowing both who and how to contact those leading the first responders will be invaluable as you attempt to gather information about the event as it unfolds.

Knowing how to get in contact with local political chieftains and the state representatives responsible for the area where your property is located will also prove to be an asset that will help you manage responding to the disaster. Direct access to local government officials can make managing and recovering from a disaster faster and easier than if you were forced to navigate bureaucratic channels.

Aside from the initial response to a disaster, one of the most overlooked aspects of a commercial property disaster plan relates to insurance coverage of both landlords and tenants.

In recent severe weather events both tenants and landlords have suffered from heavy rains, high winds and flooding, and experts predict that severe storms will become increasingly more common. Although you can't stop storms, you can reduce risks. The good news is that you can take steps now to prevent problems and cut costs with the help of experienced counsel. Tenants and landlords can prevent problems by reviewing their documents with counsel and making needed improvements before a disaster.

First, it is important to review your actual insurance policies and not just rely on certificates of insurance. Questions to consider include:

• What are your policy limits?
• Do you have the coverage your lease requires?
• Do you have business interruption coverage?

In the event of a loss, counsel can help you categorize your losses and pursue your claims. It is critical that insurance clauses be properly documented and submitted on time. Your documents can contain hidden landmines that can hurt you, such as deadlines and notice requirements, and you can lose rights if you fail to comply.

Another important way to reduce risks is to review your leases and related documents with counsel to ensure that you will not be obligated for unexpected repairs, liabilities and costs. Important lease questions to look at include: Can rent be reduced or abated? Can you terminate? Who is responsible for repairs? Is notice required? It is important that your documents protect you and meet your needs.

Recent events have shown that good leases can help prevent bad problems. Casualty, insurance, utility, repair, and other clauses can be reviewed and improved, including any rights to reduce rent, terminate, and limit liability. It is essential that your leases meet your needs.

On November 14, 2013, Stark & Stark is hosting a live webinar on how commercial and industrial properties can prepare, manage and recover from disasters. You can register for this complimentary event, learn more about the panelists and review the topics to be covered by visiting www.StarkSeminar.com.

— Jerry Nelson, Esq., is an attorney at Stark & Stark and a member of the Business & Corporate and Real Estate, Zoning & Land Use groups. He has extensive experience helping clients acquire, develop, finance, lease, manage and sell properties. Nelson is a shareholder and can be reached at jnelson@stark-stark.com.

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