What is a Landlord Indemnification Clause

The literal meaning of indemnity is protection or security against any financial burden or loss. Indemnification in legal jargon is a statute that excludes a party or parties from any sort of accountability for any kind of untoward incident or losses. In regards to the relation between a landlord and a tenant, the indemnification clause is included in the rental or lease agreement by the landlord to protect himself or herself from any financial losses or property damage that may or may not be caused due to the landlord.

Multiple Applications for the Landlord Indemnification Clause

The indemnification clause that almost every landlord has and should have is often debated and experts argue if it is entirely fair. To understand the indemnification clause, one has to take into consideration several realities.

When a landlord rents out a space or property to a tenant, the space or the property is no longer being used by the landlord. Hence, any damages in the property or in the space that may happen due to any cause would be the responsibility of the tenant. Subsequently, any financial burden that follows would be that of the tenant’s and not for the landlord to bear. However, there is a flipside to this argument. Since a landlord is the owner of the space or property, the landlord has a responsibility to ensure that his property or space is not prone to damages that can cause physical injury, loss of property and lives. There is a very thin line that demarcates what should be the responsibility of the tenant and that of the landlord.

The Best Time to Use the Clause

An ideal indemnification clause is one that neatly demarcates the responsibilities of both the tenant and the landlord. If there are any problems with the property, with its construction or with the involvement of the landlord, his or her agents, representatives or contractors then the tenant cannot be held guilty and accountable for any financial loss or damage to property. However, if there is no fault on part of the landlord and the tenant is to be blamed then the latter should bear the financial burden or the fallout of the incident and its aftermath.

Indemnification clause is typically included in lease or rental agreements so a landlord can be compliant to his or her insurance and a tenant can be compliant with his or her liability insurance. Yet, it is seen often that the indemnification clause is either in favour of a landlord or in favour of a tenant. It is imperative that both parties engage in discussions to formulate the best policy that caters fairly to both.
Posted on Jan 22, 2014


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