A fire does not end a commercial lease. A lender can.
Prime Medicine leased lab and office space at 60 First Street in Cambridge, Massachusetts on 22 November 2021. Article 14 of that lease gives the landlord three reasons to terminate after a fire. The second one is not about the fire.[1]
“In addition, Landlord, by notice to Tenant within ninety (90) days after the date of the Casualty, shall have the right to terminate this Lease if: (1) the Premises have been materially damaged and less than two (2) years of the Term remain after the date of the Casualty, (2) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt or (3) a material loss to the Building or Premises occurs not covered by the insurance required to be maintained by Landlord under the terms of this Lease.”
Clause (2) is a decision made by somebody who is not a party to the lease, for reasons that have nothing to do with the tenant, the premises, or how bad the damage was. The mortgage lender looks at a damaged building securing a loan it would rather be repaid than rebuilt, exercises a right it holds under the loan documents, and takes the check. The landlord then has a termination right it did not have the day before.
The same trigger in four leases#
This is not one landlord’s drafting. The identical sentence, “any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt,” appears in leases signed by different tenants, with different landlords, in different states, across four years.
Korro Bio signed with the same landlord in the same building on 25 April 2022, five months after Prime Medicine, and its Section 14.01 carries the trigger in the same position with the same 90 day window.[2]
Third Harmonic Bio signed an office lease at 1700 Montgomery Street in San Francisco on 19 October 2022 with JPPF Waterfront Plaza, L.P. Its Section 16.01 widens the trigger by four words:[3]
“(2) any Mortgagee requires that the insurance proceeds or a substantial portion thereof be applied to the payment of the mortgage debt”
“Or a substantial portion thereof” matters more than it looks. Under the Cambridge version, a lender that takes 70% of the proceeds and releases the rest has not required that “the insurance proceeds” be applied to the debt, and the landlord arguably has no termination right. Under the San Francisco version it plainly does. The wider clause converts a partial sweep into an exit.
Mangoceuticals signed a lease with SVHQ, LLC for space at Bent Tree Gardens, 17130 Dallas Parkway, Dallas, Texas, effective 27 October 2025, with a term commencing 1 November 2025. It is a small lease. The security deposit is $14,557.44. Section 16.A lists five landlord termination triggers and the fourth is the same sentence, word for word, as the one in the Cambridge biotech leases.[4]
So a 220,000 square foot life science building in Cambridge, a San Francisco office tower and a suburban Dallas office building all hand the same decision to the same category of stranger. It reads like form language that stopped getting negotiated somewhere along the way, which is what tends to happen to anything filed under “Casualty.”
The tenant’s trigger has a threshold and the landlord’s does not#
Read Article 14 in order and the asymmetry is built into the structure.
The tenant’s termination right in the Prime Medicine and Korro Bio leases exists, and it is not a bad one. The landlord must promptly get a general contractor’s written estimate of the time required to substantially complete repairs, called the Completion Estimate, and forward a copy to the tenant. If that estimate says the premises cannot be made tenantable within one year from the date the repair is started, either party may terminate on written notice given within ten days after the tenant receives the estimate.[1]
That is a mutual right, triggered by a document, measured against a number. The tenant loses it only if its own negligence or intentional misconduct caused the casualty.
Third Harmonic’s version sets the same mechanism at 270 days instead of a year, with thirty days to give notice instead of ten, and adds that the repair period is measured “when such repairs are made without the payment of overtime or other premiums,” which quietly lengthens every estimate.[3] Mangoceuticals has the 270 day version with a ten day notice window.[4]
Now compare the landlord’s lender trigger. It has no damage threshold. The lease does not require that the premises be untenantable, that the damage be material, or that the repair take any particular length of time. A fire that a contractor could fix in six weeks will do, so long as the lender decides to apply the proceeds to the debt. The tenant’s right is conditioned on the severity of the harm. The landlord’s right is conditioned on the behavior of its creditor.
The windows do not line up either. The tenant’s ten days run from receipt of the Completion Estimate, a document that only exists once the landlord has procured it. The landlord’s 90 days run from the date of the casualty itself. A landlord that is slow to commission the estimate is not obviously in breach of anything, and the tenant’s clock has not started.
What the tenant pays on the way out#
Termination is not a clean break. The same Section 14.01 continues:[1]
“If this Lease is terminated by either party on account of any Casualty as provided in this Article 14, then Tenant shall pay to Landlord (by assignment or otherwise) the insurance proceeds paid or payable to Tenant under the policy(ies) referred to in Section 13.02(b) on account of the damage to or loss in the Premises; however, from any such proceeds actually received by Tenant, Tenant shall be entitled to retain an amount equal to the unamortized portion (amortized over the initial Term on a straight-line basis) of the hard costs paid by Tenant to perform the Initial Tenant Work (exclusive of Landlord’s Contribution) and any Alterations.”
Follow the money through a lender-triggered termination. The lender takes the landlord’s insurance proceeds and applies them to the mortgage debt. The landlord terminates. The tenant, whose lease has just been ended by an event it had no part in, then assigns its own property insurance proceeds to the landlord.
The carve-back is narrower than it reads. The tenant retains the unamortized portion of the hard costs it paid for the Initial Tenant Work, “exclusive of Landlord’s Contribution.” A lab fit-out at 60 First Street is funded partly by the landlord’s allowance and partly by the tenant’s own money, and only the second part is in the retention. Soft costs are not hard costs, so design fees, permitting and project management are outside it. And the amortization runs straight-line over the initial Term, so a tenant burned out in year two of a ten year lease retains eight tenths of its own hard cost and hands the rest to a landlord that is not rebuilding the space.
This is the same structure we have written about from the other direction in allowance disbursement conditions: the allowance is landlord money while it is being spent and landlord money again when the lease ends early.
Five months later, in the same building, five words#
Here is the part that shows the clause is negotiable, because somebody negotiated it.
Prime Medicine, 22 November 2021, assigns to the landlord “the insurance proceeds paid or payable to Tenant under the policy(ies) referred to in Section 13.02(b) on account of the damage to or loss in the Premises."[1]
Korro Bio, 25 April 2022, same landlord, same building, same article, same section number, assigns “the insurance proceeds paid or payable to Tenant under the policy(ies) referred to in Section 13.02(b) on account of the damage to or loss in the Premises allocable to the Initial Tenant Work and any Alterations."[2]
Five words: “allocable to the Initial Tenant Work and any Alterations.” Everything else in the two sentences is identical, down to the parenthetical “(exclusive of Landlord’s Contribution).”
Without those words, the assignment covers the tenant’s property insurance proceeds on account of damage or loss in the premises, full stop. Section 13.02(b) property insurance on a biotech tenant’s premises covers the tenant’s own property, which at 60 First Street means freezers, incubators, benches, sequencers and whatever else a genome editing company keeps in a lab. Prime Medicine’s clause does not say the assignment is limited to the build-out. Korro’s does.
The retention sentence that follows is the same in both and only gives back unamortized Initial Tenant Work and Alterations. So under Prime’s wording a tenant could read itself into assigning proceeds for destroyed equipment and getting back only the unamortized cost of leasehold improvements. Korro’s five words close that gap at the front end, matching the scope of what is assigned to the scope of what is retained.
Which of the two happened, I do not know. Korro’s lawyer may have spotted it, or the landlord’s form may have simply improved between November and April. What the public record shows is two leases from one landlord, five months apart, where the later one is narrower, and the narrowing is exactly the ambiguity a tenant lawyer would flag. That is as close to a market answer as filed documents get, and it says the clause moves when somebody pushes on it.
If the lease survives, the restoration cap does the same work#
Suppose the landlord does not terminate. The lender has still taken the proceeds. Section 14.02 of the Cambridge leases, identical in both, says what the landlord then owes:[1][2]
“In no event shall Landlord be required to spend more for the restoration of the Premises and Common Areas than the insurance proceeds received by Landlord.”
Mangoceuticals has the same cap in one line: “However, in no event shall Landlord be required to spend more than the insurance proceeds received by Landlord."[4]
Read that against the lender trigger. If the mortgagee applied the proceeds to the debt, the proceeds received by the landlord are reduced by exactly that much, and the restoration obligation falls with them. The landlord does not have to choose between terminating and rebuilding at its own cost. It can decline to terminate and rebuild only to the extent of whatever the lender left behind.
Section 14.02 also runs the tenant’s money in the other direction. The tenant assigns its property insurance proceeds for the Initial Tenant Work and Alterations to the landlord, and “if the estimated cost to repair the same exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier, the excess cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s commencement of repairs,” with fifteen days to pay any further excess discovered during the work.[1] The landlord’s restoration spend is capped at the insurance it collects. The tenant’s is not capped at all.
The abatement clause points back at the capped obligation#
Mangoceuticals’ lease is the clearest on the loop this creates, because its abatement provision is a separate lettered paragraph that cross-references the capped obligation by name:[4]
“In the event a material portion of the Premises is damaged such that Tenant cannot reasonably use the Premises for the Permitted Use as a result of a fire or other casualty, the Base Rent shall abate until substantial completion of the repairs and restoration required to be made by Landlord pursuant to Section 16.A.”
Base rent abates until substantial completion of the repairs required under Section 16.A. Section 16.A is the paragraph that caps the required repairs at the insurance proceeds the landlord receives, and limits reconstruction to “building standard leasehold improvements existing in the Premises as of the date of damage,” with the tenant paying to restore anything above building standard.
So the abatement endpoint is defined by an obligation whose size depends on how much money the lender released. I am describing a mechanism, not reporting a holding. No decision I could find construes this interaction, and a tenant would have arguments, starting with the implied covenant of good faith and the ordinary reading that “substantial completion” of a smaller job still has to happen. But the clause as written ties the tenant’s rent relief to a number the lender controls, and that is worth knowing before signing rather than after.
The Cambridge leases handle abatement elsewhere and more conventionally. Their service interruption provision in Section 7.03 gives rent abatement as the tenant’s “sole remedy” after seven consecutive business days of untenantability caused by a Service Failure within the landlord’s reasonable control, which is a different clause for a different problem. We have written before about how an abatement promise can come out to nothing once the conditions are counted, in the case of a named storm deductible that exceeds the loss.
The statutes the tenant waived#
California gives tenants a statutory escape after destruction. Third Harmonic’s lease takes it away. Section 16.03:[3]
“The provisions of this Section 16 constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises or the Complex, and any Laws, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any similar or successor Laws now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises or the Complex.”
Civil Code section 1932(2) lets a hirer of a thing terminate when the thing is destroyed or so damaged it cannot be repaired without extraordinary expense. Section 1933(4) terminates a hiring by destruction of the thing hired.[6] Both are default rules that apply “in the absence of an express agreement,” which is precisely why the lease recites that it is an express agreement. The waiver is effective on its own terms, and it is standard. The point is not that it is unusual. The point is that once it is in, the lease’s own casualty article is the entire law of the subject between these parties, including the clause that lets a lender end the tenancy.
Mangoceuticals’ lease does the same thing in general terms: “Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Article, and agree that their respective rights for damage to or destruction of the Premises shall be those specifically provided in this Lease."[4]
A tenant that waives the statute and accepts the lender trigger has agreed that the lease is the only source of its rights after a fire, and that the lease gives a third party a say in whether it has a premises. That is a bigger trade than it looks on the page, and it is the same trade a tenant makes when it signs a subordination clause without a non-disturbance agreement, which we covered in foreclosure ends your lease unless an SNDA says otherwise.
A lease that gives the landlord time, not an exit#
The clause is not inevitable. CNL Retirement Clayton OH, LP leased The MapleRidge Senior Living Community in Clayton, Ohio to HRA Management Corporation under an agreement dated as of 17 May 2002. Its Section 10.1 addresses the lender problem head on and comes to the opposite conclusion:[5]
“The parties further agree that if Landlord is obligated to utilize such available casualty insurance proceeds to repay any obligations pursuant to any mortgage, then Landlord shall be entitled to an equitable extension of time (in which Landlord has to fulfill its obligations pursuant to the provisions of this Section 10.1) sufficient to allow Landlord to obtain the necessary funding to replace such spent casualty insurance proceeds and to make the repairs and/or replacements required hereunder.”
A mortgagee taking the proceeds buys the landlord time to find replacement money. It does not buy an exit. The restoration obligation survives; only the deadline moves.
The same lease also forces a decision into the open instead of leaving it to the landlord’s discretion. Under Section 10.1.1, if restoration cost exceeds the deductible plus the proceeds received, the landlord must give notice within sixty days setting out the deficiency in reasonable detail and saying whether it will fund the gap itself. The landlord has no obligation to fund, “except that, if Landlord shall elect to make such funds available, the same shall become an irrevocable obligation of Landlord.” And then:[5]
“In the event that Landlord does not elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement by Notice to the other, whereupon, this Agreement shall terminate as provided in Section 10.1.”
Three things are different from the Cambridge form. The landlord must disclose the shortfall and its intentions on a clock. An election to fund becomes binding rather than revocable. And if the landlord walks away from the gap, the tenant gets the termination right too, instead of waiting to learn whether the landlord will use its own.
This is a 2002 senior living lease, not an office form, and the operator relationship behind it explains some of the symmetry. Rent does not abate under its Section 10.4 either, subject only to a credit for business interruption proceeds the landlord actually receives, so it is not a tenant-friendly document overall. What it demonstrates is narrower and more useful: a drafter who thought about the mortgagee question wrote “extension of time,” and a drafter who did not wrote “terminate this Lease.” The second is not a law of nature. It is a default that survived because tenants negotiate rent, term and allowance, and then stop reading.
What is not here#
I found no court decision construing the “any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt” trigger in a commercial lease, in the federal opinion collections and state reporter mirrors reachable for this post. That is an absence of findable decisions, not proof of an absence of disputes. Casualty terminations tend to settle, and a tenant whose building has burned is usually out looking for space instead of suing over a clause.
I also went looking for recent commentary and did not find it. A survey of law firm client alerts and trade press published since mid-August 2026 turned up nothing dated on casualty proceeds and lender termination rights. The indexed material is clause bank entries and evergreen explainers. That is the interesting part. The clause is live in documents being signed now, Mangoceuticals signed one in October 2025, and nobody is writing about it, which is a fair description of how a term stops being negotiated.[7]
The four leases here were chosen because they carry the same sentence and differ in instructive ways, not as a sample of the market. Three of the four tenants are life science or small-cap companies whose leases get filed because they are material to a public company, so nothing here supports a claim about what the broader market signs. One further limit worth stating: in every one of these documents, the lease says what happens when a mortgagee requires the proceeds, and none of them says anything about when a mortgagee may require it. That is in the loan documents, which are not filed and which the tenant never sees. The condition is written in a contract the tenant is not party to.
Does your lease let a lender you have never met decide whether you have a premises?#
The terms that settle the answer are scattered across articles that do not sit near each other: whether the casualty article names a Mortgagee at all, whether the trigger reaches a partial sweep of the proceeds, how many days the landlord has to elect and from what event, whether the tenant’s own termination right is keyed to a Completion Estimate and at what number of days, whether the tenant assigns all of its property insurance proceeds or only the part allocable to the build-out, whether the retention excludes the allowance, whether restoration is capped at proceeds received, whether abatement is measured against a capped obligation, and whether the statutory default has been waived.
Acrebase reads those terms out of the document and lines them up across a portfolio, so a clause that stops at “the insurance proceeds” and one that reaches “or a substantial portion thereof” are visible side by side instead of sitting in two leases nobody compares. The clause library holds the version your counsel approved, with fallback positions ranked in the order you actually trade them, and the AI drafts and redlines against it, so the five words Korro Bio has and Prime Medicine does not are a standard you apply on every deal instead of a catch that depended on who was reading that week. If you would find out what your lease says about a lender taking the insurance money by receiving a termination notice, that is the problem.
If you are a landlord, keep the trigger and be precise about it. A lender that sweeps the proceeds genuinely can leave you unable to rebuild, and a termination right is the honest answer to that risk, not a trick. Say “or a substantial portion thereof” if that is what you mean, because the narrow version may fail you on a partial sweep. Run the 90 days from the casualty rather than from the lender’s election, so the window is certain. Keep the restoration cap at proceeds received. What you should expect to give up is the overreach: limit the tenant’s assignment to proceeds allocable to the Initial Tenant Work and Alterations, as this same landlord did five months later, because a claim on the tenant’s freezers is not protecting your collateral and it is the first thing a tenant lawyer will take out.
If you are a tenant, ask three questions in order. First, does the casualty article give the landlord a termination right that is triggered by someone other than the landlord? Search the article for “Mortgagee” and “mortgage debt.” Second, if it does, is there a damage threshold on it, and is there one on your own termination right? A one year Completion Estimate test for you and no test at all for the landlord is the asymmetry to attack, and the cleanest fix is to borrow CNL’s answer: a mortgagee sweep gives the landlord an equitable extension of time to find replacement funds, not an exit. If you cannot get that, get a reciprocal right, so that when the landlord’s lender takes the money you can leave too, on your schedule rather than on ninety days’ notice. Third, read the assignment sentence and make sure what you hand over is limited to the build-out, and that your retention is not quietly reduced by “exclusive of Landlord’s Contribution” when you funded most of the fit-out yourself. Then check whether you have waived the statutory termination right, because once you have, the clause is the whole of your protection.
Footnotes
[1] Lease Agreement between NW CAMBRIDGE PROPERTY OWNER LLC, a Delaware limited liability company, as Landlord, and PRIME MEDICINE, INC., a Delaware corporation, as Tenant, for the building at 60 First Street, Cambridge, Massachusetts, “made and entered into as of November 22, 2021 (the ‘Effective Date’).” The Rentable Floor Area of the Building is stated as approximately 220,000 rentable square feet. Filed as Exhibit 10.1 to Prime Medicine’s Form 10-Q on 7 August 2023, roughly twenty months after the Effective Date, so the filing date is not the lease date. The quoted material is from Section 14.01 (“Casualty”) and Section 14.02 (“Restoration”). Section 14.01 opens with the Completion Estimate mechanism: a general contractor selected by Landlord provides a written estimate of the time required to substantially complete repair and restoration of the Premises and any Common Areas necessary to provide access, Landlord forwards a copy to Tenant, and if the estimate indicates the space cannot be made tenantable within one year from the date the repair is started, either party may terminate on notice given within ten days after Tenant’s receipt of the estimate, except that Tenant has no such right where the Casualty was caused by the negligence or intentional misconduct of Tenant or any Tenant Related Parties. The policies referred to in the assignment sentence are those required by Section 13.02(b), which is not reproduced here. “Initial Tenant Work,” “Alterations,” “Landlord’s Contribution,” “Mortgagee” and “Tenant Related Parties” are defined terms used as the lease defines them: https://www.sec.gov/Archives/edgar/data/1894562/000162828023027772/q22023ex10-1.htm
[2] Lease Agreement between NW CAMBRIDGE PROPERTY OWNER LLC, a Delaware limited liability company, as Landlord, and KORRO BIO, INC., a Delaware corporation, as Tenant, for the same building at 60 First Street, Cambridge, Massachusetts, with the same stated Rentable Floor Area of approximately 220,000 rentable square feet, “made and entered into as of April 25, 2022 (the ‘Effective Date’).” Filed as Exhibit 10.2 on 12 November 2024, about two and a half years after the Effective Date. Section numbering, headings and the Article 14 text track the Prime Medicine lease. On the comparison in the body: I set the two assignment sentences side by side from the stripped text of each filing and the only difference is the phrase “allocable to the Initial Tenant Work and any Alterations” inserted after “on account of the damage to or loss in the Premises.” The retention clause that follows, including “(exclusive of Landlord’s Contribution)” and the straight-line amortization over the initial Term, is identical in both. Section 14.02 is also identical in both, including the sentence capping Landlord’s restoration spend at insurance proceeds received and the sentences requiring Tenant to pay any excess repair cost before Landlord commences repairs and within fifteen days after demand for further excess. Both leases are on what appears to be the same landlord form, so the inference in the body is that the form changed or was negotiated between November 2021 and April 2022; the documents do not say which: https://www.sec.gov/Archives/edgar/data/1703647/000095017024125362/krro-ex10_2.htm
[3] Office Lease Agreement between JPPF WATERFRONT PLAZA, L.P., a Delaware limited partnership, as Landlord, and Third Harmonic Bio, Inc., a Delaware corporation, as Tenant, for space at 1700 Montgomery Street, San Francisco, California, in the complex known as Waterfront Plaza, “entered into as of October 19, 2022.” The Rentable Area of the Building is deemed to be 142,466 square feet. Filed as Exhibit 10.16 on 29 March 2023. The cover page carries the notice that confidential information marked by [***] has been omitted; none of the redactions falls in the casualty article. The quotations are from Section 16.01 and Section 16.03. Section 16.01 lists four landlord termination conditions rather than three, the others being that repairs cannot reasonably be completed within 270 days in Landlord’s reasonable judgment, that the material damage is not fully covered by Landlord’s insurance policies provided Landlord maintained the insurance required by the lease, and that the damage occurs during the last twelve months of the Term. The 270 day periods are both qualified by “when such repairs are made without the payment of overtime or other premiums.” A page number artifact, “14,” sits between “between the parties, and” and “any similar or successor Laws” in the stripped text of Section 16.03 and has been removed from the quotation. The mutual Completion Estimate termination right here runs on thirty days’ notice after Landlord’s delivery of the estimate rather than ten days after Tenant’s receipt. The separate service interruption waiver at Section 7.03 waives California Civil Code Section 1932(1), which is a different subsection from the two waived at 16.03: https://www.sec.gov/Archives/edgar/data/1923840/000095017023010435/thrd-ex10_16.htm
[4] Lease between SVHQ, LLC, a Texas limited liability company, as Landlord, and MANGOCEUTICALS, INC, a Texas corporation, as Tenant, for space in the building known as Bent Tree Gardens at 17130 Dallas Parkway, Dallas, Texas 75248, approximately 25,745 square feet. The lease takes its Effective Date from the date set out below the Landlord’s signature, which is 27 October 2025, executed by Kris Ramji as President and CEO for the Landlord and Jacob Cohen as CEO for the Tenant. Commencement Date 1 November 2025, Expiration Date 31 October 2030, Security Deposit $14,557.44, Prepaid Rent $6,141.44, no Guarantor. Filed as Exhibit 10.1 on 29 October 2025. The quotations are from Section 16.A (“Repair or Termination by Landlord”) and Section 16.C (“Abatement”). Section 16.B carries the Completion Estimate mechanism at 270 days from the date of damage with a ten day notice window, and provides that it applies “regardless of anything in Section 16.A above to the contrary.” Section 16.A’s other termination triggers are substantial alteration or reconstruction required in Landlord’s judgment, a legal prohibition on rebuilding in substantially the same form, material damage with less than two years of Term remaining, and an uninsured loss of the Building notwithstanding Landlord’s insurance compliance. The abatement in 16.C is lost where the casualty was caused by the negligence or intentional misconduct of any of the Tenant Parties. The filed text renders the cross-reference at the end of the quoted abatement sentence as “Section 16.A .” with a space before the period, an artifact of the way cross-references are marked up in the document; the quotation closes the space. The document is a short-form office lease and the capitalized term “Permitted Use” used in the abatement sentence is defined in the Basic Lease Information: https://www.sec.gov/Archives/edgar/data/1938046/000149315225019941/ex10-1.htm
[5] Lease Agreement by and between CNL RETIREMENT CLAYTON OH, LP, a Delaware limited partnership, as Landlord, and HRA MANAGEMENT CORPORATION, a Delaware corporation, as Tenant, for The MapleRidge Senior Living Community at Clayton, Ohio, marked “EXECUTION VERSION” and “DATED AS OF MAY 17, 2002.” Filed as Exhibit 10.27 on 31 July 2002. The quotations are from Section 10.1 (“Damage and Repair”) and Section 10.1.1 (“Insufficient Insurance Proceeds”). Section 10.1 also provides a mutual termination right on a Total Casualty, exercisable at the option of either party on ninety days’ written notice sent within thirty days after the date of the Total Casualty, and states that a failure by Landlord to promptly commence and complete the repair “shall be a Landlord Default.” “Minor Casualty” and “Total Casualty” are both defined in Article I of this lease. The structure assumes a third party operator under a separate Operating Agreement that is not part of the filed exhibit, which is why Section 10.1 assigns the claims handling for a Minor Casualty to the Tenant or the Operator. Rent does not abate during restoration: Section 10.4 is headed “No Abatement of Rent” and keeps the Tenant’s obligations unabated notwithstanding any damage, subject to a credit for business interruption or rental value proceeds actually paid to Landlord. Landlord is solely responsible for the deductible. So the document is cited in the body for the mortgagee question and the disclosure mechanism, not as a tenant-favorable lease overall: https://www.sec.gov/Archives/edgar/data/1055264/000105526402000019/leaseclayton.txt
[6] On the two California statutes. Civil Code section 1932(2) permits the hirer of a thing to terminate the hiring where the thing is destroyed, or so far injured that it cannot be repaired without extraordinary expense, before the end of the term. Section 1933(4) provides that the hiring of a thing terminates by the destruction of the thing hired. Both operate as defaults where the parties have not agreed otherwise, which is the drafting hook the waiver in Third Harmonic’s Section 16.03 uses when it recites that Section 16 “constitute[s] an express agreement” and that the statutes “shall have no application to this Lease.” The characterization in the body of what these sections do is mine from the statutory text; the lease quotes neither.
[7] On the searching behind “What is not here.” The clause language was located through SEC EDGAR full-text search on the exact phrase “Mortgagee requires that the insurance proceeds,” which returns 274 filings across the full-text index and 58 filed since 1 January 2020. The variant “Mortgagee elects to apply the insurance proceeds” returns 17 filings, none since 2020. I read the four leases cited here in full text rather than relying on search snippets, and each quotation in this post was checked against the stripped text of the filing itself. On commentary: a survey of law firm client alerts, practice group updates and the trade press for items dated between 15 August 2026 and 18 October 2026 on casualty insurance proceeds applied to mortgage debt and the resulting landlord termination right returned no dated items, only clause bank pages and undated explainers. On case law: the federal and state decision sources reachable for this post contain no opinion construing this trigger. Both are reports of what I could not find in the sources available, and neither is a claim that nothing exists.
Acrebase is AI-powered contract intelligence for commercial real estate. It drafts, redlines and proofreads leases and other CRE documents, extracts clauses and flags risk across a portfolio, and keeps a team’s approved clause library and negotiation playbook consistent from one deal to the next, with fallback positions drawn from how earlier negotiations actually went. Learn more at acrebase.com, or get in touch about pricing.