Make Sure Indemnification Clause Covers All Bases

While sometimes an owner’s failure to keep a center safe causes issues, tenants are also capable of actions that cause problems, too. And that’s where arguments and litigation arise. An owner is typically responsible for maintaining the common areas of its building or center, so if someone is injured in these areas, the owner is the party that will most likely have to pay for damages from an accident. If the accident was caused by a condition stemming from the actions of your property manager or its employees or some other condition that could have been controlled, this might seem fair to you. But if the tenant caused—or partly caused—the dangerous condition that led to the accident, should you still have to shoulder the burden and cost of litigation over the incident? After all, it doesn’t seem fair that if you make the effort to keep your center safe, a tenant that doesn’t do the same would be able to pass the cost of a lawsuit on to you. The indemnification clause in your lease can do the heavy lifting. Here’s how to draft it so that it puts the onus on the tenant for its behavior. 

Downside of Typical Clause

An indemnification clause generally lets you get reimbursed by the tenant for damages that you’re forced to pay to an injured party because of something the tenant did or failed to do. But some clauses require the tenant to reimburse the owner for damages caused by the tenant’s negligence in its space, but won’t protect the owner if the accident occurred in a common area. If you have that type of indemnification clause, it could potentially create big problems for you, even in situations where you may not realize it applies—say, when your tenant has a store next to a public sidewalk.

Trend Highlights Need for Careful Drafting

There has been a trend over the past several years toward treating public sidewalks like common areas and placing more liability on owners for accidents on these sidewalks. For instance, a New York City law requires owners to get liability insurance and pay damages if someone is injured by defective sidewalks adjacent to the owners’ property. A good indemnification clause can help you avoid a situation where you’re forced to pay damages because the tenant caused someone to get hurt on a public sidewalk. So there are always additional considerations—like the sidewalk development—to think about when drafting your clause.

Don’t Limit Right

When drafting your indemnification clause, make sure it doesn’t limit indemnification to the tenant’s space. The key is to strengthen your indemnification clause to make the tenant responsible for common-area accidents that result from its negligence. To do this, ask your attorney about adding the following language to your lease’s indemnification clause where it lists what the clause applies to.

Model Lease Language

Tenant shall indemnify, defend, and save Landlord harmless from and against any and all claims, actions, demands, damages, liability, and expense, including attorneys’ and other professional fees, in connection with loss of life, personal injury, and/or damage to property arising from or related to, wholly or in part, directly or indirectly, the construction, occupancy, or use by Tenant, its officers, agents, contractors, invitees, licensees, or employees of the Premises or any part thereof or any other part or area of the of the [Building/Center], or arising from or related to, wholly or in part, directly or indirectly, any act, failure, omission, or negligence of Tenant, its officers, agents, contractors, invitees, licensees, or employees, which occurs in or relates to the Premises, the Common Areas, or any other part or area of, in, on, or adjacent to the [Building/Center].