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[Gordon Brinton]

This is my first big-time lease agreement that involves a 100 acre privately owned fairgrounds in the US. I have not yet signed the contract. I am in the process of changing/re-writing parts of the contract to give myself more teeth. My question is about damage deposit.

1. The agreement requires that I maintain $3 million of general liability covering bodily injury and property damage. (No problem, I expected that.)
2. It also requires that I make a $7500 damage deposit, in advance, which is refundable.
3. Yet another provision spells out that if I do not leave the property in its original condition, I will be billed a $500 Facility Fee.

I am wondering why I am being asked to pay extra fees and deposits if I already have the property insured? My liability policy doesn't mention any deductible amount, but concerning small amounts of damage, there must be some level of common sense about when to make a claim and when not to. ...Or, since the policy is short term, should I take advantage of it at every opportunity?

My question is really this...should I insist on removing the language about the the extra fees and deposits from the contract?

I know we're not lawyers here, but I was hoping that some of you may have already come across this. Thanks for your thoughts.

[Mark Cadwallader]

This is my first big-time lease agreement that involves a 100 acre privately owned fairgrounds in the US. I have not yet signed the contract. I am in the process of changing/re-writing parts of the contract to give myself more teeth. My question is about damage deposit.

1. The agreement requires that I maintain $3 million of general liability covering bodily injury and property damage. (No problem, I expected that.)
2. It also requires that I make a $7500 damage deposit, in advance, which is refuJndable.
3. Yet another provision spells out that if I do not leave the property in its original condition, I will be billed a $500 Facility Fee.

I am wondering why I am being asked to pay extra fees and deposits if I already have the property insured? My liability policy doesn't mention any deductible amount, but concerning small amounts of damage, there must be some level of common sense about when to make a claim and when not to. ...Or, since the policy is short term, should I take advantage of it at every opportunity?

My question is really this...should I insist on removing the language about the the extra fees and deposits from the contract?

I know we're not lawyers here, but I was hoping that some of you may have already come across this. Thanks for your thoughts.

Gordon, the following is not intended as legal advice, but you may want to seek legal advice from an attorney licensed to practice law in the jurisdiction where the property is located. Laws vary from state to state.

My best guess is that you are being asked to provide financial security for two separate classes of risk, and also being advised that you will be charged if you leave the place a dirty mess.  The insurance is probably public liability insurance, to cover body injury or damages to third-parties such as patrons and vendors. That coverage might (possibly) cover damage to the venue's property (such as a loss due to a fire); it might not provide that coverage.

The damage deposit is for the venue owner's benefit, for damage to the venue. It does not limit your liability; it just gives the owner a ready source of cash to pay for minor damage repairs.

The "facility fee" is probably placing you on notice that if you leave trash, etc, on the premises when you leave, they will charge you $500.

Just my guess; if in doubt, ask the property owner what is and isn't covered by the lease terms.

Best wishes.

Mark C

[Dave Neale]

I'm nearby in Harrisburg. I've run festivals at a lot of venues in Central PA over the years. Curious as to what the venue is?

The deposit is not uncommon, but I'd insist it be deposited in escrow.

The $7500 figure is probably the amount of damages the owner had to eat once upon a time. 

The venue would like to have ready funds for damages, not have to wait for your insurance company to process a claim.

[Gordon Brinton]

Gordon, the following is not intended as legal advice, but you may want to seek legal advice from an attorney licensed to practice law in the jurisdiction where the property is located. Laws vary from state to state.

My best guess is that you are being asked to provide financial security for two separate classes of risk, and also being advised that you will be charged if you leave the place a dirty mess.  The insurance is probably public liability insurance, to cover body injury or damages to third-parties such as patrons and vendors. That coverage might (possibly) cover damage to the venue's property (such as a loss due to a fire); it might not provide that coverage.

The damage deposit is for the venue owner's benefit, for damage to the venue. It does not limit your liability; it just gives the owner a ready source of cash to pay for minor damage repairs.

The "facility fee" is probably placing you on notice that if you leave trash, etc, on the premises when you leave, they will charge you $500.

Just my guess; if in doubt, ask the property owner what is and isn't covered by the lease terms.

Best wishes.

Mark C

Mark,  Now that I've given it more thought, you are probably correct. I have not yet purchased the insurance. All I have is a quote and it does not include enough details about the property damage to make a determination. I'll ask about it before I purchase. Thanks.

[Gordon Brinton]

I'm nearby in Harrisburg. I've run festivals at a lot of venues in Central PA over the years. Curious as to what the venue is?

The deposit is not uncommon, but I'd insist it be deposited in escrow.

The $7500 figure is probably the amount of damages the owner had to eat once upon a time. 

The venue would like to have ready funds for damages, not have to wait for your insurance company to process a claim.

Dave, glad to meet you. 10-4 on the escrow advice. The venue is The Carlisle Fairgrounds. All of the events that run there are their own. They rarely, if ever, lease the property out to outsiders. My event will be on a trial basis. If successful, I'll get additional dates from them.

I still need to have an attorney look over the agreement before we sign. If you can recommend any in this area who specialize in public events, let me know.

Thanks, man.

[Dave Neale]

Quite familiar. The large deposit makes more sense to me now. I'm pretty amazed you are getting a shot at doing a rental.

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