As landlords and tenants try to adapt to the “new normal” of the COVID-19 world, they are discovering that in many instances their existing lease documents are inadequate to address the unique concerns raised by the coronavirus. For parties that may be entering into new leases or amending existing leases in this post-pandemic environment, below is a discussion of some provisions worth considering in your new lease document.
One area that has received considerable discussion over the last several months is the question of what constitutes force majeure. As businesses shut down and tenants became unable to pay their monthly rent, both landlords and tenants began scouring lease documents to determine whether a pandemic or governmental shutdown qualifies as a force majeure event. Most lease documents do not include express language identifying pandemic, epidemic, or other nationwide medical emergency as an express force majeure event. In the absence of such express language, some have sought to rely on general catch-all clauses that provide force majeure includes “similar matters beyond the control” of the party in question.
In interpreting force majeure clauses, most courts have tended to read them quite narrowly. If pandemic, medical emergency, or other similar concept is not set out expressly, courts often will not extrapolate force majeure to include such events based solely on the general catch-all clause.
In drafting any new lease, or if the opportunity arises in the context of a new lease amendment, the parties should consider clarifying force majeure provisions to expressly include pandemics and similar events. Calling out the current COVID-19 situation may also be useful, but care should be taken not to become overly restrictive in the definition of what constitutes a pandemic or medical emergency.