Force Majeure Clause in Commercial Real Estate Leases
What Is a Force Majeure Clause?
A force majeure clause excuses one or both parties from performing certain lease obligations when performance is prevented or delayed by events beyond their reasonable control. Historically a boilerplate provision receiving little negotiation attention, force majeure became one of the most scrutinized and heavily negotiated clauses in commercial real estate following the COVID-19 pandemic.
The term "force majeure" (French for "superior force") encompasses events such as natural disasters, wars, government actions, labor strikes, and — following extensive litigation during 2020-2022 — pandemics, epidemics, and government-ordered shutdowns. An estimated 85-90% of commercial leases executed since 2021 include explicit pandemic or public health emergency language in their force majeure provisions, compared to less than 5% pre-2020.
What Force Majeure Typically Does (and Doesn't) Cover
Events Commonly Included
Natural disasters (earthquake, flood, hurricane, tornado), fire, war, terrorism, labor strikes, government orders or regulations, utility failures, pandemics or epidemics (post-2020), civil disturbance or unrest, and embargo or trade restrictions.
The Critical Limitation: Rent Payments
In the vast majority of commercial leases, force majeure does NOT excuse the tenant's obligation to pay rent. This was the central issue in thousands of COVID-era lease disputes. Courts overwhelmingly held that force majeure provisions excusing "performance" did not extend to monetary obligations unless the lease explicitly stated otherwise.
Standard language: "Neither party shall be liable for delays in performance due to Force Majeure Events, provided that this Section shall not excuse Tenant's obligation to pay Rent or any other monetary obligation under this Lease."
What Force Majeure Does Excuse
Typically, non-monetary obligations: construction timelines (TI buildout), delivery of possession, commencement date delays, compliance deadlines, and operating covenant obligations. If a force majeure event prevents the landlord from completing building renovations on time, the delivery date extends accordingly.
Post-COVID Evolution
The pandemic fundamentally changed how force majeure is drafted and negotiated:
Government shutdown provisions: Explicit language addressing government-ordered business closures, distinguishing between closures that affect the specific tenant's business type and those affecting only certain industries.
Rent deferral (not abatement): Some post-COVID leases include provisions for rent deferral (not forgiveness) during government-mandated closures, with deferred amounts repaid over a specified period after reopening.
Business interruption coordination: Provisions requiring tenants to maintain business interruption insurance and apply insurance proceeds to rent obligations during force majeure events.
Pandemic-specific definitions: Rather than relying on general "acts of God" language, modern leases define specific public health triggers: declared pandemics by the WHO, national emergency declarations, and state/local public health orders.
How AI Extracts Force Majeure Provisions
- Covered events identification: Cataloging all events listed as force majeure triggers.
- Obligation scope: Identifying which obligations are excused and, critically, which are explicitly not excused (particularly rent).
- Notice requirements: Extracting notice deadlines and documentation requirements for claiming force majeure.
- Duration limits: Identifying any maximum period for force majeure excuse and termination rights that arise if the event extends beyond that period.
- Post-COVID language detection: Flagging whether the lease contains modern pandemic-specific provisions or relies on pre-COVID boilerplate.