How to Manage Liability in Recreational Lease Enterprises
by Grant Huggins
Perceived liability risk is one of the primary factors that prevent landowners from considering a recreational leasing enterprise on their property. Most landowners have an exaggerated view of their liability risk, and, in fact, hunting injuries are declining, according to the International Hunter Education Association.
A study of the appellate court cases involving injuries or death to recreation users since 1965 found a total of 15 cases involving hunting accidents where a private landowner was found liable (Wright et al. 2003). These were appellate cases only — trial court cases and those settled out of court were not included in these statistics. Nevertheless, some of the following steps should be taken to limit liability risk in a recreational lease enterprise.
Landowners should regularly inspect their property and remove any dangerous conditions or warn lessees in writing of any dangerous conditions that are not obvious or cannot be removed.
Where practical, informal time spent with potential lessees could prove invaluable in avoiding potential problems. Simply do not lease to people suspected to be dishonest, careless or totally self-centered.
Liability Waiver/Release and Indemnification
A waiver is defined as the intentional relinquishment (or surrender) of a known right. Waivers should state that the lessee releases the landowner from "any and all losses, damages, costs and expenses resulting from any and all claims for personal injury, death, property damage or economic loss arising in any way from the lessee's use of or presence on the property, including claims arising from the landowner's negligence." The landowner should give the sportsmen-lessee "fair notice" of the waiver provision (it should not be presented to them immediately before opening day of hunting season). If included in the text of the lease agreement, the waiver should be conspicuous by using noticeable headings or placing at the beginning or end of the agreement and by having the lessees initial the waiver paragraph. Better yet, include the waiver as a separate page and require the lessees to sign it (Fambrough 2000).
In addition to waivers, landowners can also require indemnification from the lessee to provide some security against claims by guests of the lessee that use the property but are neither named in the lease nor subject to a signed waiver. This indemnification requires the lessee to assume responsibility for any claims arising from their guest's use of or presence on the property. Further, indemnification also can provide security to the landowner against claims brought by adjoining landowners due to the actions of a lessee or the lessee's guests. Indemnification provisions can be complicated, and landowners are encouraged to consult with their attorney when appropriate.
A lease manager may choose to incorporate or form another type of business entity such as a limited liability company to protect personal or other business assets from any claims arising from the operation of the recreational lease enterprise.
Insurance only provides a source of funds to apply toward any claims; it does not alleviate liability. Landowners should discuss the potential recreational lease enterprise with their general farm or ranch policy provider. Additionally, lease managers may require the lessees to provide their own liability insurance and may require the landowner to be listed as an additional insured.
Many landowner and sportsmen associations provide insurance products. Costs of similar coverage can vary greatly, so it pays to shop around. Factors influencing the premium include the lease acreage, number of lessees (especially with those policies that require separate memberships in an association for each lease member), the number of insured landowners, liability limits, deductibles, fire coverage and any exclusions such as for ATVs, tree stands, watercraft, etc.
Other steps that should be taken include managing hunter density and distribution, avoiding the provision of elevated blinds and using a carefully prepared written lease agreement.
Fambrough, J. 2000. Landowner liability for hunters. Real Estate Center Publication 893, Texas A&M University, College Station.
Wright, B.A., R. A. Kaiser, and S. Nicholls. 2003. Myths, perceptions and realities - an investigation of rural landowner liability for recreational injuries. National Symposium on Sustainable Natural Resource-Based Alternative Enterprises. Mississippi State University, Starkville.
© 1997-2009 by The Samuel Roberts Noble Foundation, Inc.