07/09/2020

Is Covid a Force Majeure in a Commercial Lease?

Customarily a commercial lease will have an "out" clause whereby the tenant does not need to pay rent in the event of a Force Majeure. A question already popping up regularly is, Is the Covid situation a Force Majeure such that the tenant is entitled to relief pursuant to the lease?

I hate to say this, but it depends. Hugo might have different restrictions in place than Lino Lakes or Forest Lake. If it is a situation where the city entirely shuts down a business due to Covid restrictions, there is, in general, a really good argument that a Force Majeure has interrupted the business. But, if the city only imposes a 50% occupancy restriction, then perhaps you have a hindrance (a word I've seen in one lease) but not a shut down and the Force Majeure clause probably does not come into play.

Sometimes Force Majeure is defined in the lease, sometimes it is not. The first focus is on the lease terms themselves and the definition of the term. If there is not one, common law comes into play.

This is just the start of the analysis and some brief examples. This is certainly a situation where a case by case analysis is proper. Do not assume that what one landlord or tenant says or does means it applies to you!

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