Office of Risk Management

GUIDELINES & POLICIES

GUIDELINES ON RENTAL & LEASE AGREEMENTS

"We have no alternative…"

Those are words we don't like to hear in risk management, for it usually means we're subject to risks we really don't want. We hear them often when the subject is leasing or using premises outside the university. The level of risk may be moderate with the "hold harmless and indemnify" language, but it may be - in our opinion - egregious. Contracts in the latter category are those requiring us to protect the owner of a venue from their own negligence. According to Dorothy Frapwell, University Counsel, this language shifts the entire financial burden of an accident to Indiana University, even if IU has done nothing wrong.

For example, there is a building in Indianapolis we must rent every year. A few years ago an attendee at our function fell because of water leaking from a water cooler, a water cooler over which we had no control. The resulting claim cost us, rather than the owner of the facility, tens of thousands of dollars because of the language in the rental agreement.

Because of these exposures, we have taken steps to shift the burden from our "self insurance" to commercial insurance for certain classes of hold harmless agreements. The $100 cost is borne by the department leasing/renting the venue.

No contract for the use of premises shall be signed until the full agreement is reviewed by the Real Estate Office (Carmichael Center 204, IUB, FAX 812-855-1156) and the insurance language is reviewed by the Office of Risk Management (Poplars 705, IUB). ORM will notify the department if the commercial insurance rider must be utilized. The final contract must be sent to the Office of the Treasurer for final signature (unless signature authority has been granted in writing by the Treasurer). Agreements for use of premises should typically be done by purchase order and Purchasing will initiate the review process. If not done by purchase order, departments should send the rental agreement to Real Estate, after which the agreement will be routed on as indicated above. Please allow three weeks processing time. We will process contracts as quickly as possible, but these several steps do take some time.

To summarize the usual path a contract to rent/lease premises must take:

Purchase Order (TOPS)
Copy of contract to Purchasing » Real Estate » Risk Management

» Treasurer's Office » Purchasing

» Certificate of insurance
(if needed)

Please include in your purchase order the account number to be charged if the rental insurance is necessary. If no other account number is provided we will charge the same account that pays for the premises rental.

Questions? Contact the Office of Risk Management, 812-855-9758 (lshaver@indiana.edu).

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