Clause

• A death and disability clause states that, upon the death or disability of the "critical person" (the principal person in the business), the tenant may terminate the lease agreement upon giving a certain amount of notice.
  
  

Purpose

• The reason to include a death and disability clause is to protect the business from loss. Without the clause, the company or a person that personally guaranteed the lease is still legally obligated under the terms of the lease even if the principal dies or becomes disabled. A landlord may sue a tenant that defaults on a lease for damages.
  
  

Terms

• A landlord may request that, in exchange for the tenant's right to terminate the lease because of death or disability, the tenant pay a termination fee. The tenant would generally have to pay the fee upon giving notice or on the termination date.