Have You Checked Your Indemnity Lease Language?

Indemnity. A word that few people actually understand and sounds kinda made-up like it was trying to be a big important sounding word, but something happened. The word which means “security or protection against a loss or other financial burden,” is actually pretty important as is the specific language about it in most commercial leases.

In fact, the California Court of Appeals recently issued an opinion which may have you taking a close look at the “boilerplate” indemnity provisions in your commercial lease.

In Morlin Asset Management LP v. Murachanian (B259800), a vendor was called to clean the carpets in the dental suite of a tenant in the office building owned and managed by Morlin Asset Management LP and Morlin Management Corporation. The carpet cleaner claimed he was injured by a defect in the common area of the building for which the landlords had the exclusive right of management and control. He sued the landlords, who then sought indemnity under the terms of their lease with the tenant.

Ultimately, the landlords argued that the carpet cleaner’s injuries arose out of the use of the premises. But, the Court of Appeal concluded “the injury to a third party that occurred outside the dental suite, in a common area over which the landlords have exclusive control, did not arise out of the tenant’s use of the dental suite. It does not matter that the accident would not have happened but for the tenant hiring the third party to clean the carpets in the dental suite, and that the third party may have been at fault. The connection between the tenant’s use of his suite and the accident in the stairwell over which the tenant had no control is too remote to have been within the contemplation of the parties when they entered into the lease.”

So, before your company signs that next lease, it’s good to have a legal pro like Dean Sperling, a champion of your indemnity, review those boilerplate provisions. And if you do have legal matter that arises from it, you’ll be much better protected and Dean can get it resolved quickly and efficiently with your best interests in mind.