The Truth about Force Majeure Notices as a Basis of Withholding Rent

Posted on June 17, 2020

The COVID-19 pandemic has created a tidal wave of commercial real estate tenants seeking rent forbearance and abatement. While much news has been made over tenants issuing force majeure notices with the hope that the coronavirus will qualify as an act of God that will relieve them of their obligation to pay rent, the reality is that most force majeure clauses expressly state that these unforeseeable events do not excuse tenants from their contractual payment duties. It all depends on the language of the lease contract and whether it specifies pandemics or government-mandated business closings as a reason for tenants to modify their rental payment obligations.

This is not to say that tenants cannot negotiate with their landlords for rent relief. Rather, savvy property owners recognize that being flexible and making concessions to help tenants now will solidify their tenant relationships and provide them with leverage to clean up and improve their lease agreements and reduce their exposure to future risks. Some options may include temporary rent reductions, payment deferrals and use of tenants’ security deposits to cover their lease rent payments.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.