Aug 26, 2021 | The Practical Real Estate Lawyer

These Model Insurance Requirements for a Ground Lease (the “Model Insurance Requirements”) consist of an extensive and detailed set of up-to-date insurance requirements suitable for use in a ground lease (a “Lease”). The Model Insurance Requirements appear in a separate exhibit so the parties can easily involve insurance advisers from the beginning of the transaction. That exhibit first presents a Base Case (the provisions one would ordinarily expect to see) followed by a collection of optional Bells & Whistles (extra measures one might use because of extra concerns or sensitivity or special circumstances).

This document is intended for a generic development Lease, in which Landlord owns vacant Land and Tenant will develop that Land by constructing a Building. These Model Insurance Requirements disregard any deal-specific elements and assume a generic development Lease that is typical and ordinary—nothing special or unusual. Of course, every commercial real estate transaction, however mundane, always has something atypical, extraordinarily, special, or unusual. These Model Insurance Requirements will require adjustment accordingly by a competent insurance adviser.

Although these Model Insurance Requirements relate to a Lease transaction, the requirements for a lending transaction will usually look rather similar, except that a lender will require endorsements and documentation different from those for a Landlord.

One can always say more about insurance. Joshua Stein’s upcoming New Guide to Ground Leases will include an Encyclopedia of Ground Leases with an entry on Insurance, with additional comments. These Model Insurance Requirements, in slightly different form, will also appear in that New Guide. Consistent with the style sheet of that New Guide, terms typically defined in a Lease are capitalized in these Model Insurance Requirements and introductory cover notes. Anyone using these Model Insurance Requirements will need to check definitions.

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