Tenant leases need carve-out clauses to cover tenant’s extended liabilities
Q: Are commercial tenants liable for groups that sell Christmas trees, pumpkins or other merchandise in the tenants’ parking lots (referred to as invitees and licensees)?
A: They are unless the lease carves out a tenant’s liability for these groups. It’s normal for a tenant to be liable for its own officers, directors and employees. But any extension/ enlargement beyond that must be eliminated before a lease is finalized, in the best interests of the tenant.
Q: Is there anything for the landlord to also consider?
A: Yes. If a tenant fails to eliminate this extension of liability, it will also possibly cost the tenant’s landlord as well — unless the landlord puts language into the same lease that makes the general liability coverage that landlord carries secondary, non-primary, excess and noncontributory to tenant’s coverage, as well as subject to a waiver of subrogation.
Q: What’s in the best interest of landlords?
A: Conversely, a landlord shouldn’t let a lease get written that allows its tenant to avoid liability for the acts, omissions and negligence of such tenant’s invitees and licensees. Why? A landlord wants the tenant to be liable for these — or they become the landlord’s liability. Big picture: Unless the tenant is a huge anchor in the center, the landlord usually wins, because the landlord’s insurance carrier will require tenant to be liable for its own licensees and invitees.