www.agg.com/news-insights/publications/is-the-coronavirus-a-force-majeure-that-excuses-performance-of-a-lease June 15, 2020. The interpretation and application of a force majeure clause depends to a large extent on the specific conditions of the clause at issue and the particular circumstances that disrupt normal activity.  Therefore, under the commercial landlord/tenant, all professional tenants who wish to rely on a case of force majeure or the doctrine of frustration to alleviate their obligations should carefully consider their rent provisions and applicable national law to determine: (1) whether a case of force majeure applies; (2) when it comes to what obligations may be excused or delayed; 3. where it is not applicable, if the common law defence of frustration can be applied on the basis of its specific realities; and (4) where the doctrine of frustration is not applicable, what are the consequences of the breach of their contractual obligations; Tenants should also consider whether the situation is truly unpredictable for them and whether the difficulties they are experiencing are more than economic difficulties, either because force majeure or frustration are not caused by economic distress. Lenders and lenders considering enforcement action on leases and mortgages should also consider legal advice in the first place. Force majeure clauses are often subject to a termination obligation. To qualify for the force majeure clause, you may only have a certain amount of time to notify the tenant as soon as the force majeure event occurs. Be sure to review your lease for this. As we all know, the pandemic continues to spread and many cities have a blockade or quarantine.
In such a case, can a commercial tenant invoke a case of force majeure to circumvent certain contractual obligations? COVID-19 will inevitably have a lasting impact on the real estate sector and the way leases are structured and negotiated. All current and future leases will be more individualised, paying particular attention to state rules, timetables, reduced budgets and, of course, the language of force majeure. As COVID-19 creates additional difficulties, landlords and tenants may consider modifying their current leases as a compromised attempt to stay afloat. In New York and California, as well as in many other states, restaurants have been ordered to stop all Dine-in services. The ability of these companies to continue their operations and generate revenue has already been seriously compromised. Many commercial tenants and retailers are also in financial difficulty. It is reported that from March to April, more than ten million new unemployment applications were filed as a result of the pandemic and more than 30 per cent of federal tenants paid none of their April rents.  This number does not include tenants who do not rent for the month or more, which is accepted by 60 to 70 per cent of tenants. Therefore, a breach of leases is easily foreseeable. In addition, the economic consequences of the pandemic have posed great challenges for tenants in fulfilling contractual obligations and maintaining their relationships with landlords, particularly commercial tenants and retailers.