Building insurance and who payswith a CIP?

[handyandy]

Hi All

I am slowly moving towards finally getting the contract for my recent CIP purchase.

In my preamble negotiation with the vendor (will be tenant) I have tried to move the lease to a net lease. One aspect that I have included as a tenant expense is not only the "standard" liability insurance but also the actual building insurance.

As I have never seen this included in a CIP lease nor discussed on this forum I am just wondering whether others are getting tenants to pay for the actual building insurance?

Cheers

 

[Scott No Mates]

Andy, in a net lease it isn't unusual for the tenant to pay for the insurances however the ones payable are in the schedule ie building replacement (fire, flood etc) coupled with loss of rent during reinstatement, plate glass, public liability but not loss of rent through tenant default (landlords insurance), cash in transit etc.


Ensure that the clause covers the lessors costs ie broker's fee as well as consultant/valuer for determining the insurable value.

A true net lease will also make provision for land tax (single holding basis), repairs and maintenance, servicing air-conditioning, general upkeep (external cleaning, gardens, gutters, exterior painting, Window cleaning etc) - how gross (or net) do you want to go? the more risk that you put onto the tenant, the lower the rent you are able to achieve) - you might want to hold some of these other costs and just make the tenant responsible.

I don't know the property but have seen a lease or two.

 

[handyandy]

Andy, in a net lease it isn't unusual for the tenant to pay for the insurances however the ones payable are in the schedule ie building replacement (fire, flood etc) coupled with loss of rent during reinstatement, plate glass, public liability but not loss of rent through tenant default (landlords insurance), cash in transit etc.


Ensure that the clause covers the lessors costs ie broker's fee as well as consultant/valuer for determining the insurable value.

A true net lease will also make provision for land tax (single holding basis), repairs and maintenance, servicing air-conditioning, general upkeep (external cleaning, gardens, gutters, exterior painting, Window cleaning etc) - how gross (or net) do you want to go? the more risk that you put onto the tenant, the lower the rent you are able to achieve) - you might want to hold some of these other costs and just make the tenant responsible.

I don't know the property but have seen a lease or two.

Thanks for that SNM

I have tried to get as close to net as possible.

I will be responsible for the shell. Roof and wall.

With the insurance who actually organises the insurance, the LL or the tenant? Seems to me that it should be the LL with a recharge to the tenant - correct?

How is the valuation organised? Simple matter of getting a valuer in to avoid arguments?

All new to me, that the tenant pays a bit more of the expenses.

Cheers

 

[Scott No Mates]

You should effect the building insurance and the valuer.

Create a budget for outgoings ie: rates, water, insurance, management fees etc.

You can use the budget or bill when each account falls due.