Indemnification: The tenant should agree to indemnify, defend and hold the
landlord harmless with respect to the acts and omissions of tenant and its agents, employees, invitees and contractors and the operation of the business in and around the premises and/or
from tenant's breach of its obligations under the lease. (See Form 16.)
Mutual Waiver of Subrogation: All leases should contain a mutual waiver of subrogation clause. In addition, the parties should be required to ensure that their respective policies recognize or confirm such waiver. The effect of the waiver of subrogation clause is to render fault or negligence irrelevant as long as either party's insurance covers the loss. (See Form 17.)
DAMAGE BY FIRE OR CASUALTY
These provisions should allow the landlord flexibility in its choices upon damage or destruction of the building or premises. First, and most importantly, the landlord should never have an obligation to repair or restore if the cost of such repair or restoration is not completely covered by available insurance proceeds. Secondly, a landlord should never have an obligation to repair or restore if its mortgagee does not consent to use of the proceeds for such purposes. Thirdly, in the event of more than minimal damage, the landlord should have the right to decide whether it is economically feasible to rebuild. With respect to damage to specific tenant's premises, the landlord should not have the obligation to repair and restore if the lease is nearly expired (i.e., will expire within 12-24 months). Normally, a tenant's rental will be abated during the period of reconstruction to the extent tenant is able to conduct its business on the premises. Landlords should make sure that their all-risk policy contains a provision or rider requiring compensation for loss of rentals.
Total Versus Partial Condemnation: The lease should provide that the lease terminates in the event of a total condemnation (or agreement in lieu of condemnation) of the entire premises or so much thereof as will prevent tenant from conducting its business on the premises.
Damages: Any damages awarded as just compensation for the building or property
should accrue solely to the landlord. However, any separate awards made to the tenant for relocation, loss of personal property, or moving expenses should be allowed to the tenant;
provided that the tenant secures a separate award for the same and; provided, further that there is no reduction in landlord's award.