Landlords and tenants face uncertainty after storms

Thousands of local homes and businesses were recently damaged or destroyed by Hurricanes Helene and Milton. However, many tenants and landlords remain unaware of their rights and responsibilities.

Commercial leases, which are often more complex, can exacerbate the uncertainty. Larry Silvestri, founder of St. Petersburg-based Silvestri Law, believes an influx of now functionally obsolete properties could create a wave of redevelopment.

Silvestri, a commercial and residential real estate transaction attorney, said examining the lease should be the first step any stakeholder takes following a natural disaster. State statutes offer little protection for tenants.

“It’s about what’s in the lease,” Silvestri said. “One of the things that comes up when there’s major damage is, does the lease terminate?”

Commercial tenants are typically beholden to what they signed in the lease, which often lacks storm-related details. Silvestri said that underscores the importance of stakeholders immediately discussing the matter with their counterparts.

He said “business realities” will then dictate the next steps. “If there’s flooding, and nobody’s got flood insurance, then the question is, ‘What are we going to do?”

Silvestri noted that some landlords may choose not to embark on an extensive rebuilding project. They could instead take the insurance proceeds and “do something else with the money.”

Some landlords may want to keep the tenant, an income-generating asset. Silvestri said most commercial leases require tenants to carry rent interruption insurance.

Commercial renters may also have insurance that covers lost profits. Silvestri said the landlord-tenant relationship then becomes a priority.

“If I’m running a beach bar, and my location is established, I want to get back up and running as soon as possible,” he elaborated. “But that often takes a joint effort between the landlord and the tenant.”

The Kai Tiki beach bar in Treasure Island. Photo: Facebook.

Silvestri believes most damaged small businesses will eventually reopen in more environmentally resilient structures. However, the property could change hands if the cost to rebuild surpasses its capacity to generate income.

Silvestri said the storm recovery spectrum spans short-term disruptions to complete redevelopments. Severely damaged buildings will not justify the investment, and he called that a “logical view.”

State law allows residential tenants to cancel a lease if a storm significantly damages or destroys their home. However, the statute’s language is vague and open to interpretation.

Those renters and landlords could face the same uncertainties as their commercial counterparts. A unit’s value, ability to generate income and the damage incurred will likely dictate if an owner repairs, rebuilds or sells the property.

“In the commercial arena, there are always early termination of lease agreements for various reasons,” Silvestri said. “A lot of residential leases allow you to pay two months rent, and you just leave. That’s a better solution than having a tenant leave and trying to sue them for damages.”

Residential tenants must continue paying rent, regardless of damage. However, a landlord could reduce the monthly payment according to usable space and amenities.

A landlord cannot illegally evict tenants, and Silvestri expects to see many mutual exit agreements. He also noted that landlords “don’t make money on vacancies,” and turnover is particularly costly for commercial building owners.

Silvestri urges those affected to examine and get help interpreting their documents. That could come from an insurer, attorney or, if a residential tenant faces persistent maintenance issues, a local code enforcement agency.

“And then don’t hesitate to reach out to the other side and talk about the practicalities of the next step,” Silvestri said.