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Lease clauses and coronavirus

(Credit: Simon Property Group)

Legal questions surrounding leases and coronavirus: Does this fall under the category of “force majeure”? Such a clause would excuse a tenant from some lease obligations if Acts of God or other events beyond the tenant’s control prevent the tenant from performing its lease obligations. However, these clauses rarely apply to any obligations to pay money. They just relate to such things as performing construction, maintaining the space, and the like. The tenant still needs to pay the rent on time, CO noted.

  • Loophole for major mall tenants: Leases for retailers often say they can reduce their rent or even move out if a certain number of other stores have stopped operating. The details of those clauses vary widely. The owner will often have a long time to solve the problem before the tenant can exercise its rights, according to Joshua Stein.
  • Concept in contract law called ‘frustration of purpose’: People often sign a lease based on certain assumptions, and in a scenario where they are completely undercut, a court will sometimes provide relief. This approach is very uncertain and difficult –– it probably will not help tenants much.

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