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Many California businesses have temporarily closed as a result of COVID-19. Does the closure of a business as a result of COVID-19 constitute a “Force Majeure” event under the AIR CRE Leases that excuses payment of Rent?
Short Answer: No. There is no Force Majeure provision in the AIR CRE Leases. Force Majeure provisions in many custom leases would also not excuse (or even delay) the obligation to pay Rent.
Discussion: The AIR CRE Leases do not contain a Force Majeure provision. Therefore, Lessees cannot look to such a provision for rent relief in the AIR CRE Leases. Note that this outcome is not different than many custom leases which do include a Force Majeure provision. In custom leases which include a Force Majeure provision, the obligations of the Lease can typically be delayed as a result of a Force Majeure event. However, there is often a “carve out” so that the tenant’s obligation to pay rent in particular cannot be delayed or excused as a result of a Force Majeure event. Below is an example of a Force Majeure provision from a custom lease.
Sample Custom Lease Provision: Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, . . . fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease, . . . shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage.
This article is not intended to address all bases upon which Lessee may contend that its rent obligation should be excused. For such guidance, please consult your attorney.