Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Commercial Leasing Law & StrategyKickerFeaturesSectionsNewsLJN Newsletters

Mutual Waiver and Waiver of Subrogation Provisions in Commercial Leases

By Myles Hannan
January 27, 2005

In commercial leases, the mutual waiver of claims for damage to property and its corollary, the waiver of subrogation by property insurers, continue to be the source of substantial confusion. Much of the confusion appears to spring from a lack of understanding of just what the waivers are intended to achieve and how they achieve it. The hypothetical below and the discussion that follows examine the rationale for these waivers, how they work and how certain other standard lease provisions should be brought into conformity with them.

Assume that Olga Owner leases her lakefront cabin for the month of July to Teri Tenant, and Teri brings along her quite valuable stamp collection on which she plans to work during vacation. Two significant things spring from these events. First, the occupant of the cabin during July will be someone other than the owner of the cabin and, second, there will be in the cabin valuable personal property that does not belong to the owner of the cabin. These facts create all kinds of issues (which is why we have leases), but two major liability questions emerge. They are: 1) Teri could incur liability to Olga if she negligently burns down Olga's cabin. Should Teri consider insuring the cabin? and 2) Olga could incur liability to Teri if there were negligently defective wiring in the cabin that causes a fire and destroys Teri's valuable stamp collection. Should Olga consider insuring the collection? The answers to these questions could be “yes” in each case (assuming that in these circumstances Olga and Teri each have an insurable interest in the other's property, which would probably be the case), but then consider the situation that would ensue. Olga, as the owner of the cabin, already carries property insurance covering fire and other casualties for the cabin, and, no doubt, Teri has scheduled the stamp collection for coverage under her homeowner's policy. Thus, if Teri were to insure the cabin against fire and other casualty and Olga were to insure Teri's stamp collection against those risks, the result would be duplicate coverages for the cabin and the stamp collection, with the only winners being the insurers. To make the case even clearer, assume that the cabin also has two separate wings, each of which will be leased in July to other tenants who also plan to bring along valuable personal property. Are we then to have four people insuring the cabin and Olga insuring the personal property of her three tenants? Furthermore, what if the “cabin” were the Empire State Building?

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
New York's Latest Cybersecurity Commitment Image

On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.

The Bankruptcy Hotline Image

Recent cases of importance to your practice.

The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

How AI Has Affected PR Image

When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.

CLE Shouldn't Be the Only Mandatory Training for Attorneys Image

Each stage of an attorney's career offers opportunities for a curriculum that addresses both the individual's and the firm's need to drive success.