Before You Sign the Sports Facility Lease Agreement

Leasing a sports facility—whether for tennis, martial arts, gymnastics, youth leagues, or tournament events—is a common practice for sports and recreation organizations. These leases allow groups such as teams, camps, instructors, and clubs to use public or private facilities for practices, games, or training sessions. In turn, facility owners benefit through rental income or by supporting community programming.

Before using a facility, a Facility Lease Agreement—typically drafted by the facility owner’s legal counsel—must be reviewed and signed by the sports/recreation organization. This document is legally binding and includes provisions on liability, insurance, and indemnification. It’s crucial that the organization, alongside legal and insurance professionals, carefully examines these terms to ensure fairness and full compliance.

Understanding Indemnification and Hold Harmless Clauses

One of the most important parts of a lease agreement is the indemnification or hold harmless provision. This clause outlines who is financially responsible if a third party (such as a player or spectator) suffers an injury or property damage related to the facility’s use.

Liabilities may arise from:

Poor construction or maintenance of the facility
Inadequate supervision or instruction
Security or crowd control issues
Medical emergencies
Parking lot accidents
Unauthorized access during off-hours

Normally, liability is assigned based on negligence. However, a lease can override this principle—shifting responsibility entirely to one party, regardless of fault.

Types of Indemnification Clauses

Indemnification clauses generally fall into three categories. Understanding the differences is critical for assessing risk and ensuring your insurance coverage applies.

1. Limited Form (Most Fair)

This version is the most balanced. Each party is responsible only for its negligence and must cover legal defense costs and damages related to its actions. It also protects non-negligent parties brought into a lawsuit.

Sample clause:
“Both the Sports/Recreation Organization and Facility Owner agree to mutually indemnify and hold harmless one another and their respective directors, officers, employees, volunteers, and agents for all third-party claims, damages, losses, and expenses, including reasonable attorney’s fees, resulting from bodily injury or physical damage to tangible property—including loss of use—caused by their own negligence arising from this lease.”

Why it’s important: Though this mirrors common legal principles, having it in writing strengthens your position and may make litigation more efficient and affordable.

2. Intermediate Form (Caution Advised)

Here, the sports organization may assume 100% of the liability—even if the facility owner was partially at fault.

Sample clause:
“The Sports/Recreation Organization agrees to indemnify and hold harmless the Facility Owner and its representatives for all third-party claims, damages, losses, and expenses, including reasonable attorney’s fees, resulting from bodily injury or physical damage to tangible property—including loss of use—caused wholly or in part by the negligence of the Sports Organization.”

Risk note: Before agreeing, ensure your General Liability insurance includes contractual liability coverage for such agreements.

3. Broad Form (Avoid at All Costs)

The most one-sided version, this clause requires the sports organization to cover losses even if the facility owner is 100% at fault—for example, in cases of bleacher or roof collapse.

Sample clause:
“The Sports/Recreation Organization agrees to indemnify and hold harmless the Facility Owner and its representatives for all third-party claims, damages, losses, and expenses, including attorney’s fees, resulting from bodily injury or physical damage to tangible property—including loss of use—caused by the negligence of either party arising from this lease.”

Warning: This form may be unenforceable in some states due to being against public policy or deemed “unconscionable.” Never agree to this type of clause.

How to Respond to Unfair Clauses

If your lease includes Intermediate or Broad Form language:

Consult your attorney or insurance advisor.
Strike out the unfair provision and replace it with Limited Form language.
Initially, the revision was to make it part of your counteroffer.

In most cases, facility owners will accept this revision. If they refuse, consider accepting the Intermediate Form only if your insurance policy covers it. Do not accept Broad Form provisions under any circumstances.

Insurance Requirements for Sports Organizations

Facility lease agreements typically require:

A Certificate of Insurance showing a General Liability policy
Minimum $1,000,000 per occurrence limit
Insurer rated A- or better by AM Best
The facility owner listed as an Additional Insured

Ensure your policy includes contractual liability coverage. Be cautious of the following policy issues:

Three Common Insurance Gaps:

Overly broad indemnity language in the lease, requiring liability beyond bodily injury and tangible property damage.
A “Contractual Liability Limitation” endorsement, which may void coverage for lease-related liability.
An “Amendment of Insured Contract Definition CG2426” endorsement, which can eliminate coverage if you assume another party’s sole negligence.

Insurance Requirements for Facility Owners

The lease should also require the facility owner to provide proof of their own General Liability coverage. This policy should:

Be with an A- or better-rated carrier
Include at least $1,000,000 per occurrence coverage
Cover incidents arising from the facility owner’s negligence

Final Thoughts

Signing a facility lease agreement without fully understanding the legal and insurance implications can leave your organization exposed to significant financial risk. Always:

Review the lease thoroughly
Consult with legal and insurance experts
Negotiate fair indemnification terms
Verify insurance coverage compliance

While these steps are essential, they’re not a substitute for having robust, affordable sports insurance in place.

Ready to protect your organization? Click the “Get a Quote” button at the top of this page to explore coverage options tailored to your needs.

DISCLAIMER: This article provides general information and is not legal advice. Always consult with local legal counsel and your insurance agent before signing any facility lease.

– John M. Sadler