Insurance covenant Flashcards
(9 cards)
what are the common insurance covenants?
- LL to insure against defined risks
- T to pay insurance rent
- LL to reinstate property
- Rent suspension
- Termination
what are ‘defined risks’?
specific risks stated in the lease
how can T seek to protect themselves when negotiating the lease in regards to ‘defined risks’? What is the effect of this?
Include ‘and other risks the LL may reasonably require’
This prevents LL from insuring against unlikely + expensive risks.
what is insurance rent?
this is defined in the contract but may inc.: premium, insurance to cover T’s lost rent, excess.
explain the covenant ‘LL to reinstate property’
how might T seek to negotiate on this?
LL must use proceeds fix property
T may negotiate they are paid proceeds if reinstatement not possible.
explain ‘rent suspension’
express provision that rent is suspended in certain circumstances / a time period
explain ‘termination’
the lease should inc. provision for termination if reinstatement is not possible
what happens if the lease is silent on which party picks up any shortfall?
LL picks up any shortfall (i.e. from excess, exclusions, conditions etc)
what happens if there is no rent suspension clause?
T is still liable to pay rent
