Do you need a force majeure clause in your commercial lease?

Do you need a force majeure clause in your commercial lease?

On Behalf of | Jun 11, 2021 | Commercial Real Estate |

Signing any lease means making a major financial commitment to a landlord, but commercial leases often have many longer-lasting consequences than residential leases. 

First of all, rent for a commercial space is almost always higher than rent for a comparably-sized residential property. It is common for a commercial lease to last multiple years instead of 12 months or just one month at a time. Commercial leases also often come with property maintenance obligations and common area maintenance (CAM) fees that increase what you pay well beyond the actual rental rate. 

You obviously want your business to succeed and to make the most of the facility that you intend to rent, but situations can certainly arise that you would have no way of predicting. Should you ask to add a force majeure clause before you sign a commercial lease?

What does a force majeure clause do for a commercial tenant?

The phrase force majeure essentially means “the superior force.” In the context of a lease for a commercial facility, a force majeure clause refers to circumstances outside of the control of the tenant. 

For example, a natural disaster that affects the supply chain for your company could trigger the force majeure clause. Acts of war, crime and terrorism could also fall under the scope of a force majeure clause.  Any devastating event that keeps your business from normal operations and falls well outside the scope of your control could potentially trigger a force majeure clause. 

If you choose to invoke the force majeure clause in your lease, you can potentially terminate your lease without financial consequences due to the issues or hardship caused by that superior force. 

Understanding a commercial lease and the various clauses you can include is the first step toward drafting or a document that protects you instead of just leaving you liable to a landlord.