The COVID-19 pandemic dramatically altered the real estate landscape, bringing unprecedented attention to contract provisions that many parties had previously glossed over during negotiations. Among these, force majeure clauses emerged as critical components deserving careful consideration. For real estate professionals, investors, and legal advisors like James Neeld, Missouri lawyer with extensive experience in real estate transactions, understanding these provisions has become essential to proper risk management.

Typical Force Majeure Provisions

Force majeure, French for “superior force,” refers to unforeseeable circumstances that prevent someone from fulfilling a contract. Traditional force majeure clauses in real estate contracts typically cover “acts of God” such as natural disasters, war, terrorism, or government actions that make performance impossible or impractical.

Most standard clauses share these core components:

• A definition of qualifying events
• The required impact threshold (impossibility, impracticability, hindrance)
• Notice requirements
• The effect on contractual obligations (extension, suspension, or termination)
• Allocation of costs during the force majeure period

“When drafting these provisions, specificity is crucial,” notes James Neeld, legal services professional specializing in real estate transactions. “Vague language can lead to disputes about whether an event qualifies under the clause, potentially negating its protective intent.”

Pre-pandemic force majeure clauses rarely explicitly mentioned disease outbreaks or pandemics. Those that did often buried such references among lengthy enumerations of potential catastrophes without contemplating the specific consequences a global health crisis might have on real estate operations.

Pandemic-Related Developments

COVID-19 fundamentally transformed how parties approach force majeure provisions. Courts across jurisdictions have had to interpret whether pandemic-related disruptions trigger standard force majeure clauses that don’t explicitly mention pandemics.

Several significant developments have emerged:

1. Explicit pandemic language: Post-COVID contracts increasingly name “pandemic,” “epidemic,” or “public health emergency” as specific force majeure events.
2. Causation requirements: Courts have scrutinized whether performance was truly impossible due to the pandemic itself or merely more difficult or expensive.
3. Government order distinction: Many courts distinguish between impossibility caused by the pandemic itself versus government-mandated shutdowns or restrictions.
4. Industry-specific provisions: Different property types experienced unique challenges, prompting tailored force majeure language for retail, office, multifamily, and industrial properties.

“The evolution of force majeure jurisprudence requires careful analysis of recent case law,” says James Neeld, Missouri lawyer who has guided clients through pandemic-related contract disputes. “What constituted adequate force majeure protection three years ago may be insufficient today.”

Courts have generally required parties to demonstrate that they could not mitigate damages through reasonable alternative means. For example, many rejected force majeure claims from commercial tenants who could still operate partially or through alternative methods.

Negotiation Strategies

Effective negotiation of force majeure provisions requires balancing protection against unforeseen events with commercial certainty. For property owners, developers, and tenants seeking guidance from experts like James Neeld, legal services provider focused on real estate transactions, several strategies have proven effective:

1. Specificity in enumerated events: Rather than relying on catch-all language, explicitly listing potential disruptions (including public health emergencies, supply chain disruptions, and labor shortages) provides greater clarity.
2. Graduated response mechanisms: Instead of binary “triggered/not triggered” provisions, sophisticated parties now incorporate tiered responses based on the severity and duration of the force majeure event.
3. Performance thresholds: Clearly defining what constitutes “impossibility,” “impracticability,” or “hindrance” helps prevent disputes about whether a party’s obligation is excused.
4. Notice and mitigation requirements: Detailed procedures for how and when to provide notice, along with explicit mitigation obligations, help manage expectations during disruptive events.
5. Financial responsibility allocation: Addressing which party bears costs during force majeure periods can prevent disputes when disruptions occur.

“The negotiation process should include scenario planning,” recommends James Neeld, Missouri lawyer with a track record of successful real estate contract negotiations. “Walking through hypothetical disruptions helps identify gaps in protection before they become problems.”

For sellers and landlords, limiting force majeure protection or excluding monetary obligations (particularly rent payments) remains a priority. Buyers and tenants, conversely, seek comprehensive protection and extension of force majeure to payment obligations where possible.

Alternative Performance Considerations

Beyond traditional force majeure provisions, parties should consider complementary contractual protections that provide flexibility during unexpected disruptions:

1. Material adverse change clauses: These provisions allow renegotiation or termination when fundamental circumstances underlying the transaction change dramatically.
2. Performance benchmarks with flexibility mechanisms: Setting objective performance metrics with built-in adjustment mechanisms accommodates market fluctuations.
3. Dispute resolution procedures: Expedited mediation or arbitration provisions specifically for force majeure disputes can prevent protracted litigation.
4. Temporary alternate performance standards: Provisions allowing modified performance during disruptions (like reduced operating hours or altered service levels) can prevent all-or-nothing force majeure disputes.
5. Insurance requirements: Requiring business interruption coverage with specific trigger events can provide financial protection complementing force majeure rights.

“Forward-thinking contract drafting includes layered protection,” explains James Neeld, legal services expert known for innovative real estate solutions. “Force majeure provisions work best when integrated with other risk-allocation mechanisms.”

Continuous monitoring obligations can also create early warning systems for potential force majeure events, allowing parties to begin mitigation efforts before performance becomes impossible.

Looking Forward

As the real estate industry absorbs lessons from recent disruptions, force majeure provisions continue to evolve. Climate change considerations are increasingly relevant, with expanded provisions addressing extreme weather events, water shortages, and other environmental contingencies.

Supply chain disruptions have prompted more sophisticated force majeure language in construction contracts and agreements with significant material delivery components. Labor market volatility has similarly influenced provisions related to project completion timelines.

Technology disruptions represent another emerging force majeure category, with provisions addressing cybersecurity incidents, telecommunications failures, and other digital infrastructure challenges that can impact smart buildings and property management systems.

For real estate professionals seeking to navigate this complex landscape, consulting with experienced attorneys like James Neeld, Missouri lawyer specializing in commercial real estate, provides essential guidance on risk management strategies tailored to specific transaction types and business objectives.

The future of force majeure in real estate contracts lies not merely in broader protection but in smarter, more nuanced provisions that balance certainty with flexibility. As the sector continues adapting to post-pandemic realities, these once-overlooked clauses will remain at the forefront of thoughtful contract negotiation.