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Force majeure clauses can help to protect commercial tenants and landlords

On Behalf of | Oct 31, 2023 | Real Estate Law

Although some commercial landlords use boilerplate leases, many commercial property owners and the tenants renting from them choose to negotiate, often so that specific clauses that are not part of a boilerplate agreement can be included in the text of their contract(s).

Many of the most popular clauses included in commercial leases specifically protect either the landlord or the tenant, not both. For example, clauses outlining late fees only result in compensation for a landlord when a commercial tenant makes a payment late. However, some contractual inclusions can potentially benefit both parties signing a commercial lease.

Those negotiating a commercial lease in Tennessee often add a force majeure clause at the request of the tenant specifically. However, when properly worded, a force majeure clause can offer protection to both the landlord and the tenants renting a commercial unit.

How a force majeure clause works

The term force majeure means greater force, and it is a clause releasing parties from their obligations to each other. People can invoke a force majeure clause in a scenario where factors outside of their control prevent them from fulfilling their obligations. A tenant might invoke a force majeure clause in situations where they have no choice but to cease operating their business, such as a natural disaster or an act of terrorism. When a force majeure clause is in effect, a landlord will not be able to hold a tenant personally accountable for failing to pay rent.

Given that the average commercial lease lasts for multiple years, such clauses could protect a business or its owner from substantial financial liability. Force majeure clauses can also protect landlords by forgiving them of an obligation to provide space and other amenities to a tenant in circumstances beyond their control.

Invoking a force majeure cause could lead to conflict

Tenants frustrated by lack of access to a property might fight a landlord when they attempt to invoke the force majeure clause in a lease. Landlords might also resist similar attempts by a tenant who cannot currently operate their business due to factors outside of their control.

Complicated lease matters often require professional help both at the time of creating a lease and when negotiating a solution between the commercial tenant and the landlord if a dispute should arise. Ultimately, seeking legal guidance and identifying specific terms that may benefit the property owner or tenant can help people create more effective lease agreements and better enforce the document they signed.