The Rent Review Specialist
Insurance Rent
Commercial Property Insurance - Part 2
Whether lawyer or surveyor, we professional advisers to landlords and tenants have a dual-role in the field of business tenancies: to help clients to abide by and comply with the law, and where the client has not sought our advice beforehand to find legitimate ways to wriggle out of liabilities and responsibilities. For further reading please visit LandlordZone.
Commercial Property Insurance - Part 1
Amongst the thorny issues in the relationship between landlord and tenant is the building insurance premium. For further reading please visit LandlordZone.
Insurance
When a lease requires the tenant to pay the landlord’s cost of insuring the premises, the relevant clause will usually refer to the landlord’s covenant to insure, as in “the tenant will pay the landlord’s cost of insuring the premises in accordance with clause x”.
The matter of building insurance is amongst the more thorny issues of tenancy management. The recent case Green v 180 Archway Road Management Co Ltd [2012] could well add to the problems.
In outline, insurance rent is only payable by the tenant where landlord complies with its own obligations.
The case involved a ground floor shop with three flats above The landlord was required to insure the building in the joint names of the landlord and the tenants Each tenant paid one quarter of the cost of the building insurance premium. Originally the certificate of insurance showed the landlord as the insured, included a general interest clause and noted specific interests. For the last three years no specific mention was made of one of the tenants, (Ms Green). She claimed she was not liable to pay towards the premiums as the landlord had not complied with his covenant to take out the policy in joint names.
The Upper Tribunal (Lands Chamber) held that in order to be entitled to recover payment from Ms Green, the landlord had to show that it had placed insurance in accordance with the relevant clause in the lease. The Tribunal appears to have accepted that noting of special interests was sufficient to satisfy any lease with joint insurance obligations (although many may argue this point).
Placing insurance in the name of the landlord with no mention of the tenant’s name and relying on a general interest clause was not, however, sufficient. Ms Green was therefore only liable to pay for those years when her interest had been directly named on the insurance policy.
The matter of building insurance is amongst the more thorny issues of tenancy management. The recent case Green v 180 Archway Road Management Co Ltd [2012] could well add to the problems.
In outline, insurance rent is only payable by the tenant where landlord complies with its own obligations.
The case involved a ground floor shop with three flats above The landlord was required to insure the building in the joint names of the landlord and the tenants Each tenant paid one quarter of the cost of the building insurance premium. Originally the certificate of insurance showed the landlord as the insured, included a general interest clause and noted specific interests. For the last three years no specific mention was made of one of the tenants, (Ms Green). She claimed she was not liable to pay towards the premiums as the landlord had not complied with his covenant to take out the policy in joint names.
The Upper Tribunal (Lands Chamber) held that in order to be entitled to recover payment from Ms Green, the landlord had to show that it had placed insurance in accordance with the relevant clause in the lease. The Tribunal appears to have accepted that noting of special interests was sufficient to satisfy any lease with joint insurance obligations (although many may argue this point).
Placing insurance in the name of the landlord with no mention of the tenant’s name and relying on a general interest clause was not, however, sufficient. Ms Green was therefore only liable to pay for those years when her interest had been directly named on the insurance policy.