Understanding Force Majeure

Commercial Lease Language

Force Majeure (noun): an event or effect that cannot be reasonably anticipated or controlled — compare act of god

Force Majeure is a paragraph in commercial leases that most of Commercial Real Estate has never paid attention to. Force Majeure is a simple concept, with a fancy term basically referring to acts beyond the control of the landlord or tenant.

The reason the clause exists in your lease is generally to address things outside the control of the landlord or tenant. Most often applied to build out and occupancy of a space, where a work stoppage may keep a landlord from delivering a space, to no fault of their own.

Recently this term has been thrown around in regards to the State of Michigan’s shutdown of most businesses and the order to "shelter in place" at home. Some have floated the idea that Force Majeure gives tenants the ability to not pay their rent during this period.

Depending on the wording used in the clause, it may be unclear as to the application in this case. However, if your lease has a single line in it reading something like "The provisions of this clause shall not excuse the Tenant from prompt paying of rent or additional rent made by the terms of this lease" then it is clear. There is no waiver of rent under this clause.

We recommend that landlords proactively reach out to their tenants to discuss their ability to meet their lease obligations, before an issue arises. A written policy for use at your property is the best idea, allowing you to evenly and fairly apply your policy across all tenants.

If you need assistance with policy or procedure for your commercial property, our team is ready to assist.

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