Updated almost 15 years ago on . Most recent reply
Hold Harmless Clause
A property manager I want to use has a hold harmless clause in their management agreement. My understanding is this could potentially make me liable for their negligence. I have asked them to remove it but they won't. I've also asked my insurer if there any any issues, and am waiting for a reply. Anyone know is this is a problem, and if so is there a workaround/addendum wording?
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#3 Guru, Book, & Course Reviews Contributor
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Joe, it's best to spend a few bucks and get your attorney to look at it. They are treated differently from one area to another, judge to judge.
A hold harmless and indemnification agreement should be mutual to be most effective. For one side to require immunity and not allow the other side to have some balance is usually not successful, but can be depending on the nature of the agreement. It could be that the consideration for your releasing them of any liability is part of the consideration "paid" for their services, or that they will not provide such service under other conditions.
Regardless of what the indemnification agreement might say, they will still be held to a higher duty of care as a professional service and what is customarily required of the to act in a prudent business like manner. These gray areas need to be reviewed by an attorney familiar with such agreements in your area.
I know, because I have used them and have been saved by them as well as having them end up as worthless as the ink used to write them. A PM will be held to certain standards of conduct and care regardless of them screaming "it's not our fault"!
However they work well when subrogating against you for your negligence. If you did not make a repair they notified you about and someone gets hurt, the tenant might win against the PM (and you) but the PM will come after you for the loss suffered arising from the claims of that tenant or subrogate against you, that will probably fly right through with the full force and effect of the agreement, including reasonable attorney fees and costs of collection. Good luck....