Commercial landlords and tenants are encouraged to closely review their lease documents to determine (1) whether, and to what extent, the COVID-19 events, declarations and restrictions qualify as a force majeure performance excuse under the applicable lease, and (2) any applicable requirements for providing notice of nonperformance under that lease. Force majeure provisions are included in many commercial leases and generally operate to excuse a party’s nonperformance when an event outside of the party’s control prevents them from fulfilling their obligations under the lease. Whether these types of events qualify as force majeure under a lease depends largely on the specific language of the provision.

Landlords and tenants should review their leases to determine the following:

• Is there a force majeure provision?
• Is the force majeure provision applicable to these COVID-19 events?
• Does the force majeure provision excuse performance by the landlord, or by the tenant, or both? 
• Does the lease specify within how many days of the party’s knowledge of a potential delay or non-performance a landlord must provide notice to a tenant? If unspecified, notice of any delays or nonperformance should be provided to the other party as soon as possible.
• Does the force majeure clause permit a party to terminate the lease?

Landlords and tenants should anticipate that force majeure provisions will likely not excuse the timely payment of rent. However, both parties should confirm the language of the applicable clause, because landlords can expect tenants to request rent relief. Landlords will want to know what their lease requires in evaluating those requests.

Other areas to which force majeure provisions may be applicable and which the parties should consider would include:

• Are there timelines or deadlines for construction of tenant improvements? What if permits or materials are delayed or not available?
• Does the lease require a tenant to be open and operating continuously and/or during certain times and hours?
• Does the lease require a landlord to keep the building open?
• What services does the lease require a landlord to provide?

The specific wording of the lease will be essential when reviewing a force majeure claim and preparing a proper response to any delays in performance.

Click here to read more about commercial contract considerations during the pandemic.

R. Stephen Carroll is a member of the Coronavirus Task Force, a cross-disciplinary team that can quickly and efficiently deploy talent from relevant practices to address concerns and issues in real time.

Any opinions expressed and any legal positions asserted in the article are those of the author(s) and do not necessarily reflect the opinions or positions of Miles & Stockbridge P.C. or its other lawyers. This article is for general information purposes and is not intended to be and should not be taken as legal advice on any particular matter. It is not intended to and does not create any attorney-client relationship. Because legal advice must vary with individual circumstances, do not act or refrain from acting on the basis of this article without consulting professional legal counsel. If you would like additional information on the subject matter of this article, please feel free to contact any of the lawyers listed above. If you communicate with us, whether through email or other means, your communication does not establish an attorney-client relationship with either Miles & Stockbridge P.C. or any of the firm's lawyers. At Miles & Stockbridge P.C., an attorney-client relationship can be formed only by personal contact with an individual lawyer, not by email, and requires our agreement to act as your legal counsel together with your execution of a written engagement agreement with Miles & Stockbridge P.C.