Law Firm Landlord – 5 General Liability strategies to keep the rent money and avoid the risk – Part II

In our last post about the Law Firm Landlord, we addressed the Law Firm Landlord’s professional liability exposures and in part II below, we will address the general liability insurance risks involved when subleasing your office space to another firm.  While it is tempting to receive the rental income, you must follow certain steps to insure that you are not exposing your firm to additional costs and liabilities.

Let’s consider this scenario – your tenant has a visitor who gets hurt after tripping and falling over files on the floor in your tenant’s office.  You, as the law firm landlord, could be involved if this scenario resulted in a lawsuit.  Here are five ways you can help reduce the impact of these and other types of general liability risks for your firm:

1)  Make sure your tenant has their own Commercial General Liability Insurance for the leased space.  Require the tenant to name your firm as an additional insured on their General Liability policy.  The additional insured status gives you some protection if you are brought into a suit due to your tenant’s negligence as it relates to the office space.  Typically there is no cost for the tenant law firm to have their landlord named as an additional insured for General Liability.

2)  Have the tenant provide you with a certificate of insurance showing their current General Liability policy and your firm as an additional insured.  Your firm should be listed on the certificate as the certificate holder.  Obtaining a copy of their policy helps to make sure they have insurance, but it is not enough.  By being named as a certificate holder, you can be notified if their policy is canceled.   You should ask for a certificate every year.  Set a reminder in your calendar to request an updated certificate from the tenant about 30 days prior to their policy expiration date.

3)  The General Liability, additional insured and certificate requirements should actually be part of your tenant’s lease.

4)  Make sure the tenant understands you are not providing insurance for their office equipment.  The tenant must purchase their own property insurance.  Typically, they can purchase what’s called an Office Package policy which can provide coverage for both their General Liability and Property.  These policies are inexpensive and easy to obtain.

5)  If you are providing the tenant with any office equipment, you should have some type of agreement in place detailing who is responsible for repairing or replacing the property if it is damaged or destroyed (for example due to a fire caused by the tenant).

These tips will help your firm collect the rent without collecting the lawsuits.  If you have any other tips on this issue, please share them by commenting below.  What’s worked and what hasn’t worked in your situation?

 

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