The beauty of buying a property is that while normally things are safe and set in stone once the contract is signed by both parties, sometimes there’s room for change. Things happen; life isn’t perfect, and versatility may be a must when a real estate-related deal no longer seems like a good idea.
That’s why something known as force majeure exists.
What Exactly is Force Majeure?
In real estate, force majeure is a clause that can free both parties from any or all of the liabilities stated within a lease agreement or real estate purchase agreement. Basically, it’s a legal way that the contract can be broken without penalties.
This clause is only considered when there’s an event that meets at least three criteria.
These criteria include that the event was inevitable and unexpected and/or unable to be controlled, that said event did in fact directly affect the affected party’s ability to maintain loyal to the contract, and that the affected party already did everything in their power to stay true to the legal agreement.
A serious natural disaster or major war are examples of events that may trigger the activation of force majeure in real estate contract.
Force Majeure After a Commercial Property Sale
It’s true that even commercial purchase agreements, not just residential purchase agreements or commercial/residential lease agreements, can be altered when and if force majeure comes into effect.
For example, a party might be able to legally delay their obligation to repair or continue construction on a commercial property after it was sold. But if commercial roofing repairs are required, you may need to immediately contact a commercial roofing contractor.
Force majeure can also eliminate a party’s obligation to deliver possession of the property within a specific timeframe. It’s important to note that force majeure clauses can vary from one commercial purchase agreement to the next. In addition, it’s possible that the agreement doesn’t include a force majeure clause at all. (Although, most do.) Without force majeure, one might want to consult with a lawyer.
Consequences Associated with Force Majeure
Anyone who already knows how to sell commercial property typically has a good idea of what force majeure is. But what about someone who’s new to selling commercial property or is even interested in purchasing such? This person may not understand the risks of force majeure.
One of the biggest downfalls (or in some cases, advantages) of force majeure is that if the associated event ends up lasting longer than expected, it may be a must to completely end the contract all together. This may or may not be difficult on both parties involved.
Also, bad news for the directly affected party: debts owed following the property sale are usually not excused under force majeure.
Conclusion
As everyone knows, real estate contracts are normally a done deal once all parties agree to the terms within the contract. Therefore, it is highly recommended that you schedule a Commercial Property Survey and inspection before you sign any contract. However, it’s completely possible that the obligations stated in the contract will not have to be met by either or both parties if force majeure is put into effect.
