I have advocated for years that before signing a commercial lease, both prospective tenants and landlords should have their leases reviewed by a litigation attorney, not simply a business or transactional specialist.
Transactional attorneys are, by their nature, focused on closing the deal. Litigation attorneys, on the other hand, often see the deal as a problem waiting to happen where drafting weaknesses, particularly in the otherwise innocuous boiler-plate provisions, are left untouched. It is in the boiler-plate that litigation careers can be made.
Take for instance a typical insurance clause – landlords and tenants will each obtain insurance coverage protecting their respective insurable interests. Of course there may be more complicated provisions, but it is common that each side to the commercial lease secure insurance. So what happens when a tenant fails to obtain insurance, or coverage is mistakenly cancelled for non-payment, and one winter the roof collapses – a roof the landlord controls – causing damage to the tenant’s business? The tenant can sue the landlord right? Possibly wrong or very wrong.
In Creative Dental Concepts, LLC v Keego Harbor Development, LLC, Case No. 315117 (June 26, 2014), this very thing happened and one sentence in the insurance boiler-plate clause – “If either party fails to obtain insurance, it bears the full risk of its own loss” was ruled to bar any claim for negligence by the tenant against the landlord for breach of duty to maintain, inspect and repair the roof. This one sentence, the court reasoned, set forth in clear terms of the parties’ unambiguous decision to bar claims when insurance was not obtained as the lease required. This particular language may not have been deemed a significant detail given the parties’ clear intent to obtain insurance, but hindsight is 20/20.
There is often a resistance by deal makers to avoid “lawyering up the deal” for fear of scuttling it or making it too complicated or expensive. There can be fair concerns. However, a pre-lease litigation screen might have caught this little gem, and quite possibly avoided for the tenant the loss it must now fully absorb.
Matthew J. Boettcher is a partner in the firm’s Bloomfield Hills office and Co-leader of Plunkett Cooney’s Commercial Litigation Practice Group. He concentrates his practice in the area of commercial litigation with ...
Add a comment
SubscribeRSS Plunkett Cooney LinkedIn Page Plunkett Cooney Twitter Page Plunkett Cooney Facebook Page
- Commercial Liability
- Business Risk Management
- Commercial Real Estate
- Real Estate Mortgages
- Business Torts
- Real Estate
- Commercial Leasing
- Alternative Dispute Resolution (ADR)
- Commercial Loans
- Mortgage Foreclosure
- Civil Litigation
- Shareholder Liability
- Class Action
- Product Liability
- Tax Law
- Fraud Activity
- Risk Management
- Cyber Attack
- Biometric Data
- Banking Law
- Statute of Limitations
- Internet Law
- Non-compete Agreements
- Residential Liability
- Zoning and Planning
- Consumer Protection
- Department of Education (DOE)
- Fair Debt Collection Practices Act
- Fair Credit Reporting Act
- Unfair Competition
- Uniform Commercial Code (UCC)
- When are Clear, Unambiguous Contracts Nonetheless Ambiguous?
- What the Future may Hold for Michigan Real Estate Foreclosures and Evictions
- The Dispute Subject to Arbitration, or is it? Who Decides?
- Illinois Supreme Court Slams Courthouse Door on Non-residents' Product Liability Claims Against Non-resident Defendants for Injuries Suffered Outside State
- Supreme Court Rules Fully Funded Pension Plans Cannot be Sued Under ERISA for Mismanagement
- A Day in Someone Else’s Shoes: Can Mortgagees Challenge Ad Valorem Assessments?
- Landlords may be able to Recover Future Damages Even After Tenants Vacate Leased Premises
- A Deeper Dive Into Minority Owner Oppression Claims
- Is Coronavirus Pandemic an Excuse not to Pay or Perform a Contract? A Short Primer on Applicable Legal Doctrines
- Navigating the Illinois Biometric Information Act