When Hurricane Harvey struck Houston in August 2017, widespread flooding left behind more than property damage. It also created the backdrop for a lease dispute centered on whether mold rendered a tenant’s premises entirely unusable, thus allowing the tenant to withhold its entire rent, or just portions of the premises unusable, in which case the tenant was only allowed to withhold partial rent.

In Intertek USA, Inc. v. Trical Commercial Investments, LLC, No. 14-23-00475-CV (Tex. App.—Houston [14th Dist.] Apr. 29, 2025), the tenant, Intertek, leased 18,073 square feet of office space in Houston at a monthly rent of $33,069.33. Following flooding from Hurricane Harvey, mold developed in portions of the facility, and Intertek withheld rent for three months—November 2017 through January 2018—arguing that the lease’s “Hazardous Substance Condition” clause entitled it to abatement because the premises were unsafe for employees. The landlord disputed tenant’s claim and held the tenant in breach for failure to pay rent when due. As a result, the landlord subsequently terminated the lease, evicted Intertek, and filed suit to recover its damages.

A jury sided with the landlord, awarding $780,880.59 in damages for unpaid rent and the remaining rent due under the lease term, along with $412,589.00 in attorneys’ fees. On appeal, the Texas Fourteenth Court of Appeals upheld the damages award and remanded the fee award for a new trial.

The outcome turned on both the lease language and the evidence. The abatement clause allowed rent to be reduced only to the extent the tenant’s use of the premises was impaired. Multiple environmental consultants conducted testing contemporaneously, and the results indicated that while a few areas contained mold, most of the other areas, if not all, remained safe and usable. As one expert testified: “my review of the results didn’t indicate any conditions that would keep anyone from occupying the office.” The appellate court noted that there is no explanation in the record as to how the entire office space was made unsafe by the mold identified in the areas.  Intertek failed to present credible evidence showing that the entire facility was unsafe.

The court therefore concluded that full rent abatement was not justified. By withholding all rent without proving complete impairment, Intertek exposed itself to lease termination and a significant damages award, which included both the unpaid rent for November 2017 through January 2018 and the rent remaining for the balance of the lease term.

This case underscores several important lessons. First, landlords should ensure abatement provisions are proportional to the degree of impairment. Second, contemporaneous expert testing is critical. Here, it was the detailed and timely environmental reports—rather than after-the-fact arguments—that persuaded the court. Had Intertek presented credible evidence showing the entire space was unfit for use, the outcome may have been different. Finally, tenants should think twice before withholding rent when there is a dispute over whether the tenant is entitled to such rent abatement. Oftentimes, the safer route is for the tenant to continue to pay the rent, under protest, and file a lawsuit against the landlord. Had Intertek chosen this path in this case, it would have been able to keep its space and avoid the substantial damage claim.