BERMUDA Law and Practice Contributed by: E. Scott Swainson, Andrew Morgan and Erik Gotfredsen, Wakefield Quin Limited
6.12 Insurance Issues Who Insures?
6.15 Specific Regulations Limitations on Agreeing Terms
The landlord is almost always responsible for insur - ing the building and common parts, with the tenant insuring their own contents. The cost of the landlord’s insurance is frequently passed back to the tenants as part of the service charge. Insured Risks Insured risks typically include fire, windstorm, flood and civil commotion. Landslip, heave and subsidence are typically not covered, absent an addendum and additional premium. Deductibles Most policies have a deductible for windstorm/hur - ricane damage. Occupiers’ Liability Most building insurance policies will include owner and occupier liability coverage as standard but at a relatively low level, which can be increased on request. Suspension of Rent Most Bermuda leases include a suspension of rent if premises are rendered incapable of use due to an insured loss; see 6.4 Typical Terms of a Lease . 6.13 Restrictions on the Use of Real Estate It is usual for landlords to restrict use of the demised premises to a “permitted use”. Use must also comply with the applicable zoning. The landlord does not war - rant that the permitted use is lawful – responsibility to verify this falls on the tenant at common law. 6.14 Tenant’s Ability to Alter and Improve Real Estate Leases typically prohibit material alterations, additions and improvements to the demised premises without the landlord’s previous written consent. It is usual to secure approval to fit out and for simple changes that do not impact the structure at signing. There are generally absolute prohibitions on structural alterations.
In the majority of cases, landlord and tenant rules and regulations apply equally to all categories of real estate, whether residential, industrial, office, retail or hotel, and the parties to a lease are able to agree its terms at their discretion. Short-Term Residential Lets There are limited exceptions for short-term residen - tial leases, where the landlord must maintain essential cooking and plumbing services and cannot transfer that liability to the tenant. Special provisions apply to rent controlled proper - ties – ie, residential units below a particular ARV. The threshold is currently USD22,800 and so applies to lower value housing – eg, studio/one-bed units and very small cottages. Impact of the Pandemic The Bermuda government recommended a rent defer - ral scheme during the COVID-19 pandemic, whereby tenants were allowed to defer rent for several months and then make up the shortfall after businesses were allowed to reopen. This scheme was not mandatory but many landlords allowed rent deferrals and reduc - tions, to protect longstanding tenants. The govern - ment did not provide rental support or assistance for landlords. 6.16 Effect of the Tenant’s Insolvency In the event of tenant insolvency or a receiving order in bankruptcy, most leases allow for termination of the lease. The official receiver may also disclaim an onerous lease. 6.17 Right to Occupy After Termination or Expiry of a Lease Leases End on Expiry Most leases expire by effluxion of time at the end of the fixed term. There are different rules for periodic tenancies, especially of farming land. Security of Tenure There is no statutory security of tenure for commercial tenants, and hence these leases often include a con -
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