Do you know what you just signed?

Posted by Jim Pietro on Jul 16, 2013 12:01:00 PM

Owners of commercial properties are always faced with pressure to keep their buildings fully leased. After all, if a building isn't rented there isn't any revenue coming in to cover expenses. Costs like heat, lights, maintenance and so on all have to be paid regardless of occupancy. If economic times are difficult, the pressure to get and keep tenants is magnified.   Jim


For the last five years, lessees have felt that they have been in control of the rental process. Not only has tough economic times reduced rents, it has also produced far more aggressive attempts at negotiating lease terms in favor of the tenant.

Let me describe a scenario that recently happened to one of my insured's. A large national retailer had an interest in occupying a space in one of my insured's commercial buildings. The building owner desperately wanted this national retailer as an anchor tenant for one of his properties. The prospective tenant sent a copy of their "standard" lease agreement to be reviewed by the building owner. The insurance section of the tenant's "standard" agreement outlined the limits of insurance to be carried and the type of liability coverage to be provided, all normal stuff. The agreement went on to include the following language, "Such insurance shall be endorsed to provide that the (lessor's) insurance shall be primary and not contributory to any similar insurance carried by Tenant and shall contain...a waiver of subrogation clause..." This one sentance is an attempt to shift any and all liability (even if it occurs in the tenant's place of business) to the landlord. According to this wording, the tenant and his insurance carrier could not be held liable for any loss even if it was caused by tenant!

My insured called me and had his attorney send me a copy of the tenant's lease agreement to review. What happened next? Check out my next blog to find out...

Topics: Jim's Blog, liability insurance, business insurance

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