Leases can provide protection for both landlords and tenants; however, they are not always as black and white as they seem. In the event of a claim, a lease can provide clarity in determining the responsible party because there is no room for interpretation. Each party’s obligations are set forth in clear, unequivocal terms, and courts tend to strictly enforce commercial contracts.
Lease Components
The information below illustrates components outlined in a lease and their importance if an incident occurs.
| Commercial Insurance | Maintenance and Upkeep |
| Make commercial insurance a requirement in your lease, and provide the recommended limits a tenant should purchase. Your tenant(s) having general liability and property coverage means there is less of a chance your policy will need to respond to a loss and your personal assets will be put at risk. | Ensure the lease includes in-depth descriptions of how maintenance will be handled, such as who, specifically, is responsible for different types of maintenance tasks and repair costs. While a lease may contain language about responsibilities regarding maintenance, repair, etc., a property owner is ultimately responsible for ensuring the maintenance and repairs are completed. |
Tips for Commercial Property Owners
- Obtain proof of insurance prior to a tenant signing a lease
- Provide a complaint or maintenance form to your tenant(s) that allows them to notify you when maintenance is needed
- Log maintenance requests, including dates and details — if a dispute arises, referencing a log can be helpful
- Have a professional review your lease
- Review and update leases at the end of each lease term
- Draft leases with separate sections and headers so they’re easy to navigate when reviewing specific terms and obligations
Claim Example
A customer inside tenant-operated XYZ General Store slipped and fell into a puddle of water from a leaking ice machine. Our insured is the landlord of the premises, who leases the property to XYZ General Store. The lease agreement requires that the tenant defend and indemnify the landlord in the event of a loss.
A certificate of insurance confirmed the name of the tenant’s insurance carrier. The tenant’s carrier received the necessary documentation and agreed to indemnify and defend our insured and handle the loss under their policy.
