While the global financial crisis and subsequent recession may still be affecting many small businesses, including Inns, one area where the turmoil has created opportunities is in the renting of real estate space. Leasing your facility, in part or in its entirety, to an outside entity can be a mutually beneficial proposition, but it can have its own problems.
To protect yourself and your Inn, Merriam Insurance recommends you take advantage of our expertise and follow these important tips:
- Execute a signed written agreement between the Inn and the lessee.
- Ensure you get proof of insurance naming your Inn as an “Additional Insured.”
- Ensure that you have “Damage to Rented Premises” coverage.
- Obtain a security deposit for at least one month’s rent.
- Determine who will be in charge. Facilities and equipment maintenance, property upkeep and purchasing are all part of what will have to be managed between your Inn and the lessee.
- Consider how you know this person. It makes a difference whether the person is a stranger, a long-time guest, or a childhood friend.
- Consider running a background check. This will help to determine if the lessee has taken good care of facilities and grounds in the past, has paid bills on time, and if they have ever been convicted of a felony.
Inns interested in scaling back, or those looking for an additional revenue source, can consider leasing their facility to someone else. While the immediate benefits may be obvious, the risk for a potential legal battle does exist. Contact Merriam Insurance to speak with one of our Inn insurance experts today to learn more.