COMMERCIAL PROPERTY – EXAM NOTES
INSURANCE
WHO INSURES?
Usually Landlord retains the control over insurance to protect the landlord’s INSURANCE
reversion and the premises
However, tenant usually covenants to reimburse the landlord for the cost of
the insurance
Where landlords are insuring
the landlord’s property, the
LINK BETWEEN INSURANCE AND REPAIR
insurance policy terms should
Tenant’s solicitors will try to amend any repairing obligation in favour of the be fair and reasonable and
tenant to exclude the repair of any insured risk represent value for money and
Tenant’s solicitor may therefore require sight of the insurance policy be placed with reputable
insurers.
WHY IS AN INSURANCE CLAUSE NECESSARY?
Landlord’s must always
No implied obligation on either party to insure disclose any commission they
Important that terms insured risk and uninsured risks are clearly defined are receiving and must provide
full insurance details on
WHAT ARE ITS MAIN PURPOSES?
request.
Both parties need to make sure their respective interests are fully protected
Rent suspension should apply if
Clarifies the following issues:
the premises are damaged by
o What happens when damage occurs?
an insured risk or uninsured
o Will tenant continue to pay rent?
risk, other than where caused
o Can the lease be terminated?
by a deliberate act of the
o What risks are insured?
tenant. If rent suspension is
o How much will the policy be?
limited to the period for which
o Will the premium be passed onto the tenant?
loss of rent is insured, leases
o Who’s name will the policy be under?
should allow landlord’s or
LANDLORD’S CONSIDERATIONS tenants to terminate their
lease if reinstatement is not
Protection of their asset completed within that period.
Policy should be taken out in their name, so they have control. Landlord’s
responsibility because it is likely to be more cost effective and avoid Landlord’s should provide
inconsistencies appropriate terrorism cover if
If landlord’s want to keep premiums at a lower rate, they could opt not to practicable to do so.
insure against higher risks such as terrorism, flooding and contamination
If the whole of the premises
Landlords with multiple tenants occupying one property might negotiate
are damaged by an uninsured
against a service charge suspension period as they would argue the rest of the
risk as to prevent occupation,
property
tenants should be allowed to
If damage has been caused by an insured risk, the landlord would want to
terminate their leases unless
qualify the obligation to rebuild or repair the damages e.g. the clause could only
landlord’s agree to rebuild at
impose the obligation if the landlord can get planning permission or certain
their own cost.
consents to do so
TENANT’S CONSIDERATIONS
Adequate insurance in place
Tenant would want the landlord to covenant:
INSURANCE
WHO INSURES?
Usually Landlord retains the control over insurance to protect the landlord’s INSURANCE
reversion and the premises
However, tenant usually covenants to reimburse the landlord for the cost of
the insurance
Where landlords are insuring
the landlord’s property, the
LINK BETWEEN INSURANCE AND REPAIR
insurance policy terms should
Tenant’s solicitors will try to amend any repairing obligation in favour of the be fair and reasonable and
tenant to exclude the repair of any insured risk represent value for money and
Tenant’s solicitor may therefore require sight of the insurance policy be placed with reputable
insurers.
WHY IS AN INSURANCE CLAUSE NECESSARY?
Landlord’s must always
No implied obligation on either party to insure disclose any commission they
Important that terms insured risk and uninsured risks are clearly defined are receiving and must provide
full insurance details on
WHAT ARE ITS MAIN PURPOSES?
request.
Both parties need to make sure their respective interests are fully protected
Rent suspension should apply if
Clarifies the following issues:
the premises are damaged by
o What happens when damage occurs?
an insured risk or uninsured
o Will tenant continue to pay rent?
risk, other than where caused
o Can the lease be terminated?
by a deliberate act of the
o What risks are insured?
tenant. If rent suspension is
o How much will the policy be?
limited to the period for which
o Will the premium be passed onto the tenant?
loss of rent is insured, leases
o Who’s name will the policy be under?
should allow landlord’s or
LANDLORD’S CONSIDERATIONS tenants to terminate their
lease if reinstatement is not
Protection of their asset completed within that period.
Policy should be taken out in their name, so they have control. Landlord’s
responsibility because it is likely to be more cost effective and avoid Landlord’s should provide
inconsistencies appropriate terrorism cover if
If landlord’s want to keep premiums at a lower rate, they could opt not to practicable to do so.
insure against higher risks such as terrorism, flooding and contamination
If the whole of the premises
Landlords with multiple tenants occupying one property might negotiate
are damaged by an uninsured
against a service charge suspension period as they would argue the rest of the
risk as to prevent occupation,
property
tenants should be allowed to
If damage has been caused by an insured risk, the landlord would want to
terminate their leases unless
qualify the obligation to rebuild or repair the damages e.g. the clause could only
landlord’s agree to rebuild at
impose the obligation if the landlord can get planning permission or certain
their own cost.
consents to do so
TENANT’S CONSIDERATIONS
Adequate insurance in place
Tenant would want the landlord to covenant:
