Lease Contracts & Hold-Harmless Agreements

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Hold harmless” is a legal way of saying, “Don’t worry, I know it wasn’t your fault.” It’s a term typically included in various legal documents, including lease contracts, to acknowledge that some amount of risk is involved in a transaction or arrangement. Its intention is to provide immunity to the parties should damages occur. No one will be held liable and no one can be sued – at least in theory.

A hold harmless clause might be contained in the lease itself, or it might take the form of a separate letter.

Hold Harmless Clauses in Leases

A hold harmless agreement for a rental property contract typically absolves one party if the other party to the contract does something illegal or causes damage to the premises. It might state that the landlord in a hold harmless agreement doesn’t have to foot the bill for repairs should the tenant damage the property – the tenant would have to pay for repairs – or that the landlord is not liable for any injuries to others or damages that might occur due to actions the tenant took. A commercial lease might provide that the landlord won’t be held liable if a customer is injured in a leased storefront due to actions taken by, or negligence on the part of, the tenant.

These clauses are also commonly found in lease contracts that involve an individual, business or organization renting a venue for a limited time or a special occasion. The hold harmless clause in this case might say something like “Sally’s Wedding Service and its employees and guests hold harmless Joe’s Golf Club from any and all actual or alleged liability, loss, damage and/or injury to property or persons.”

In other words, Joe has no liability if one of Sally’s guests should become inebriated and burn the club to the ground. Anyone injured in the fire could not sue Joe over the event.

Who Does the Clause Bind?

Hold harmless agreements can bind one party to the lease contract, or they can bind both parties. A clause that binds both is referred to as a reciprocal agreement. Sally and Joe’s agreement might state that Joe isn’t liable for anything that Sally’s guests or employees might do, and that Sally isn’t responsible for injuries to those gathered if Joe’s roof collapses on them due to lack of maintenance or repair.

A unilateral clause would bind either Joe or Sally, but not both.

What to Include

A hold harmless clause or agreement in a lease or letter should clearly identify all the parties to the contract, and it should explicitly state who is protected from liability and who is offering protection. A reciprocal agreement would state that both parties are protected and each is offering protection to the other.

The clause should define a concise time period during which the agreement will remain in effect. This might be for the entire term of a residential or commercial lease, such as one year, or just the date of an event in a venue.

In some cases, parties to the agreement might want to cite a state code or law that applies, and they might need the assistance of an attorney to get this right. A hold harmless clause can be declared invalid if it’s vague or inaccurate in any way.

It’s Not Foolproof

Hold harmless clauses aren’t necessarily ironclad or foolproof, and courts have been known to disregard them if they’re found to be unreasonable, limitless or unclear. In fact, some states don’t recognize hold harmless provisions at all – another very good reason why individuals should consult with a local attorney before going to the time and effort of preparing one.

Parties to such an agreement might also make a claim that they were pressured or bullied into signing the agreement in an effort to invalidate it, or that a party who was indemnified actually contributed in some way to the incident that gave rise to damages.