In this episode, Justin Sievert, partner at Sievert Werly, LLC discusses important “need to know” elements of facility rental agreements, both as a renter and when renting your own facilities.
Highlights
- Indemnification provisions and how they work
- Standard facility rental agreements
- Negotiating agreements
- Insurance requirements
[agroup first=”0″ connect=”110″] [accordion title=”Transcript (beta)” connect=”110″] 00:12 OK, we are back once again for legal perspective on athletics and as usual we have Justin Sievert with us. Justin, thanks for joining us again. Every market is good to be back. We’re gonna talk about all sorts of great stuff this semester from a more business operation standpoint and today we’re gonna be talking about facility rental agreements so they know that this is something that many campuses if not all are dealing with in some way, shape or form, whether it’s renting your own facilities or going outside to rent facilities for your own sports needs. But there’s a lot that goes into this discussion. So I’m looking forward to hearing what you have to say about this, but let’s just jump right in. What should we be thinking about here are, what are we going to talk about today with regard to facility rental agreements?
01:01 Obviously with any type of contract you’re going to have a ton of different provisions in issues you’re going to need to negotiate and draft well. Um, but today we’re really gonna focus on liability issues and we’re really going to look at it from two different perspectives because with, with colleges and universities and their departments, you know, they deal with facility rentals from, you know, one on one hand being the person being the being the organization that owns the facility and they’re renting that facility out in order to get some additional income or they might have a sport that needs to use a facility that’s not their own and they’re actually the, the renting party, um, and they need to use that facility for competition or practice. So we’re really going to look at it from both angles and obviously, you know, hopefully, you know, schools are using written facility agreements, you know, which are prepared and reviewed by their attorneys and hopefully their insurance agent as well. 01:56 I’m really to make sure the, the liability is accepted and transferred in these agreements are appropriate. Um, and that any of their insurance requirements are also comply with. So with, with liability issues for facility rentals, you know, it’s, it’s very, very problematic for institutions because they can arise in a number of ways. I mean obviously you could have injuries to the spectators are participants that are related to maybe a construction issue or an improper maintenance issue with the facility maybe you have at the facility that you’re renting out and it’s an off hours event where you don’t have staffing there and there was some type of trespassers who get into a facility and get injured somehow or maybe at the event itself when you’re going to get out the, the renting parties and supervising their activity properly. Um, in terms of medical care or even managing the parking lot. 02:46 So liability issues can happen in a number of ways and kind of how the law works with liability and how negligence works is, you know, typical legal principles that you know, each, each party is, is really going to be responsible for the safety in that area and the extent that they were negligent. I’m themselves. However, you know you can use a contract to really change how the liability works and in one party can concrete contractually, you know, accept the liability that may normally belong to the other party and where this happens in the contract is the provision that’s known as either the identification old or the whole harmless provision and this is going to determine which one of the parties is a contractually responsible for various issues when a third party may suffer an injury. So that’s really what we’re gonna look at today. 03:47 Got It, and you mentioned indemnification and I’ve seen that over time and the agreements that I’ve had or needed to provide insurance information for, but what do indemnification provisions look like and what are they all about? How do they work? 04:04 I think typically with was the facility rental agreement. You really see three different types of indemnification provisions. You have your limited form provision and that’s really the same as how negligence works. Each party is going to be responsible for its own negligence. You also, your second form is intermediate form and this is where one of the parties is going to be responsible for 100 percent of the total liability for its own negligence and the partial negligence or if they were partially negligent and then you have your last negligence area, last indication of type and that’s your broad form and that’s where one of the parties is going to be responsible for either party’s negligence, even if the other party was the only negligent party. So those are the three different types you’re typically going to see in an indemnification provision. 05:00 Got It. And as you said earlier, you hope that everybody’s using a formal written agreement than more and more. That becomes increasingly important. The the old handshake agreement, that really is not sufficient anymore, but what are we looking at? What are you usually see in facility rental agreements out there? 05:21 So what you usually see is if you’re the party that’s trying to, to rent the facility, you really want to make sure that you’re trying to have that and then vacation provision be a limited form provision because that’s really the most equitable type of revision because it’s, again, it’s going to require each party to be responsible for its own negligence and then pay for any costs and damages, um, that, that they’re responsible for it and not have to worry about the cost of damages at the other party is responsible. So if you’re the right thing party, you should really always try to this type of provision, the section, second option admit, or the intermediate indemnification provision. Again, this is going to be a situation where if you’re the renting party, you’re going to be responsible for your own negligence if you’re the sole negligent party. 06:12 But even if you’re partially negligent, you’re probably also going to be responsible for some of you know, the other parties for the facilities, uh, their damages and costs as well as it relates to any lawsuit. Then the final provision, again, the broad Ford provision. This is really what the facility owner is going to try to get because you know, they’re probably going to be the more the party with more bargaining power and this is going to prevent them from being liable in any situation, even if it’s something that they’re actually negligent about because the liability would shift to the renting party. Um, so that’s, that’s really how those, those three or look that from, from the renter and the facility owners perspective. 07:00 Well I know anytime we may be looking at entering into an agreement, there might be an established or are published a agreement or price or whatever it might be, but often these things are negotiable and if we’re looking at a situation where we want to utilize the facility or vice versa, rent our own and we enter into some negotiation, what, what should our goal be when we’re negotiating? And do you have any tips for somebody that’s in that situation? 07:30 So if you are renting party and you’re trying to rent out a facility and you’re looking at your indemnification provision and you’re reviewing it and it’s either an intermediate or broad form provision, you should really strike those provisions from the contract and replaced them with a limited form language, um, because you’re basically what you’re doing by doing that is making a counter offer for the terms of the lease. Um, and so it’s really important to change that language because you don’t want to accept, you don’t, you don’t want to accept an intermediate form provision unless you have to. And you never, ever should, should accept the broad form provision. That should never be your fallback option. That’s just not a practical and smart legal decision. And under most circumstances, the facility owner will probably shift from abroad form to an intermediate form. But again, if they hold strong with that broad forum provision, you don’t want to accept that you want to move on and pursue another option. 08:27 If you are the facility owner and you’re trying to rent out to, you know, maybe, uh, maybe a community, a high school team, something like that, you want to have stronger language, like an intermediate or a broad forum provision because that’s going to put, that’s going to shift the liability towards the renter rather than making it equal under limited form. So you really have two different goals depending on what, whether you’re the renter or the facility owner. And another thing to really remember what, you know, a broad forum provision is that it actually in some states, broad forum provisions are illegal on based on public policy just because there is so unfair that states don’t want to allow them. So make sure you understand your state laws before, if you’re there, if you’re the facility owner, you try to incorporate abroad form an indemnification provision. 09:18 Early on you mentioned insurance and the requirements in these types of situations. But what about insurance and facility agreements? How does this all factor in to what we’re talking about? So, just briefly, if you’re the renting party and you’re trying to rent space from a facility, usually the lease agreements going to require insurance. That evidence is that you have a general liability policy and that the facility owner is added, is one of the additional insured on that. Um, the important thing to remember is that this is OK and in compliance with your actual arrangement, your contract with your insurance provider, because if not and you sign an agreement, you know, with the facility and the, and that’s not covered under the insurance, you might actually be in breach of contract with, with your insurance contract itself. So you’re really wanting to make sure that your general liability policy adequately covers the contractual liability that you may be assuming in your vacation provision of that facility lease agreement. 10:25 And then the same thing if you’re at a facility owner, you want to make sure that that facility lease agreement requires that the rent there also has some type of general liability policy. So, so no matter what probation you’re, you’re, your, your identification is under that. They also have the ability, um, to be insured to cover any sort of, you know, potential liability issues. Got It. Sure. Is a lot to think about here. I mean, I, again, I go back to my own experiences where there were always lots of these informal handshake agreements with regard to facilities and usage going both ways and the world has changed quite a bit. And this, we’re really only, I think scratching the surface of the stuff I know. But if you were to wrap up this segment, what do you think is important for people to take away from this conversation today? 11:16 I think that the important factor is just thinking about your own facilities and applying what we just talked about. So how many, how many, how many schools have you know, a facility where it just might not be staffed properly at certain times of day and the and somehow you know, outside people from the community come in and use the facility or maybe you know, kids get out of school early at the high school and they come over and want to use your basketball courts if, if things like that happen that you don’t have, your facility isn’t being properly monitored, you have liability issues. Same thing if you’re renting the facility to a high school team, if somebody is injured during the use of that facility, maybe they’re, they’re, you know, in the hallway and there some sort of maintenance issue that wasn’t taken care of and they’re injured. 12:05 If you don’t have a proper indemnification provision, then you might be responsible for that students that, that, that renting parties injury. So you really want to make sure and really think about all the different ways that your facilities are managed and all the different groups. They use your facilities and it really makes sure that you have the most appropriate. Then the vacation policy as possible to really limit your liability and the same goes true if you’re trying to rent out a facility for your student athletes. You want to make sure that you are doing your best to protect the institution from paying out if something were to happen. 12:42 This is great stuff and Justin, I really appreciate you taking the time and sharing it with us today.
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