A force majeure clause is a provision allowing parties to alter, prevent, or delay their contractual obligations due to circumstances beyond their control. These circumstances make performance impractical or unfeasible and can be impacted by any number of concerns, including severe acts of nature, labor disputes, terrorism, and epidemics.
In a recent decision from the Northern District of Illinois, a commercial tenant argued that Illinois Governor Pritzker’s COVID-19 shutdown and restrictions triggered the force majeure clause in its lease. As a result, the tenant was not required to pay full rent for the months after the shutdown.
The bankruptcy judge agreed with the tenant, holding that the Governor’s COVID-19 shutdowns and restrictions “unambiguously” triggered the force majeure clause in the lease. The judge did not require the tenant to pay the full lease amount after the shutdown. However, the tenant was required to pay reduced rent for the months after March 2020, based on the amount of business the tenant had after the shutdown.
We continue to see the unprecedented effects the coronavirus pandemic has had on community associations. Contractors have limited or discontinued construction, maintenance, and other association work due to labor availability, supply chain shortages, stay-at-home orders, and travel restrictions. Board members and property managers are working with the association’s legal counsel to review vendor agreements for breach of contract, termination and/or suspension of work concerns.
This decision from the Northern District of Illinois may impact condominiums, homeowner, and townhome community associations to the extent that they have leases with businesses and the businesses were forced to shut down.
If you have any questions regarding this decision and its potential impact to your association, please contact our law firm to discuss further.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. We have four office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin. Our attorneys are also licensed in Arizona, Florida, and Missouri.
Please note the material contained in this article is for educational and informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained in this article. You should not act on the information discussed in this article without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information in this article, the law can change quickly. Accordingly, please understand that information discussed in this article may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed in the article law at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the article, or the accessibility of the article generally. This article may be considered.