Encyclopedia
Indemnifier
A party who promises to cover the landlord's losses if the tenant defaults. It's often stronger than a guarantee.
For example: A business owner selling their company asks to be released as indemnifier when the lease is assigned. (Illustration only, not a real deal.)
This is a general industry term with no single official definition. Your lease or contract wording controls.
Example only, not a real client. Say your new design company signs a five-year lease, and because the company has no track record, the landlord asks you to sign as indemnifier. We agree you will cover the company’s obligations only for the first three years and up to one year of rent, with a release if rent is paid on time. You sign knowing exactly how much is at stake.
What I’d tell a friend
If you are asked to be an indemnifier, treat it as a personal commitment. Negotiate limits and have a BC lawyer explain what you are taking on before you sign.
Why it matters to you
If the tenant stops paying, the landlord can come to you for the rent and the other lease costs, often for the whole term and any renewals. Before you sign, push for a cap on the amount, an end date, and a release if the lease is assigned.
How to use it in your deal
Tenants and owners should limit the indemnity: a cap on amount, a time limit such as the first few years, and release when the lease is assigned or the tenant shows strong financials. Make sure renewals and amendments don't extend liability without your signature. Landlords should ask for indemnities from people or companies with real assets, check their financial statements and get proper legal wording.
Buyers should confirm indemnities pass to them when they buy the building. Lenders sometimes ask for similar personal promises on loans. Get independent legal advice before signing, because these can follow you for years. Check whether the indemnity carries on through renewals, extensions and assignments, since that decides whether you're still on the hook years after you've stopped thinking about the lease.
Mistakes I see
Signing without a cap or end date. Assuming assignment releases you. Not reading the wording that waives defences. Landlords taking indemnities from people with no assets.
In BC and Vancouver
The lease and indemnity agreement control. BC courts enforce clear indemnities, with decisions on CanLII.
Official sources: CanLII (court decisions)
What an indemnifier does
An indemnifier agrees to cover the landlord’s losses if the tenant does not meet its obligations under the lease. In practice it works much like a personal promise to back the lease, though the legal wording differs.
Landlords ask for one when the tenant is a new company, has limited assets or is taking on a long lease with a large improvement allowance.
Limiting your exposure
Ask for a cap on the amount, a limit on the number of years or a release after a period of on-time rent. You can also ask that your obligation end if the lease is assigned to a financially strong new tenant.
Offer alternatives if they fit, such as a larger deposit or a letter of credit. Read whether you are also bound by renewals and amendments you did not sign.
Questions to ask before you sign
- What am I covering, and for how long?
- Is there a cap?
- Am I released on assignment?
- Do renewals extend it?
- Should I get my own lawyer?
Keep reading
Related terms: Guarantor, Assignment (lease)
Working through this right now? Questions are free. Book a 15-minute call or call or text 604 256 2002, and I’ll give you a straight answer.
Back to the A–Z index · common questions · tactics to watch for · the shorter glossary
General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.