Series: Real Estate in the Time of Covid Part One

by Saeed Tellawi

We’ve been receiving a high volume of calls from both landlords and tenants wondering what their rights are in the aftermath of COVID-19 and other recent natural disasters like the Texas Freeze of 2021.  This article is intended to answer some of those questions and give a general framework through which both commercial and residential landlords and tenants can consider their options.  This is not intended to be specific legal advice related to any situation, which can only be given after speaking to an attorney who has heard the facts and read the relevant contracts and documents.

What is a Force Majeure or Act of God?

While Force Majeure and Act of God don’t technically mean the same thing, they are often used interchangeably as they are in this article.  One way to look at this unified idea is natural or man-made events that were agreed to be causes that excuse performance or that could not have been foreseen and prevented by the parties to a legal contract. These typically include things like storms, strikes, riots, and other major events.

Ultimately, whether COVID qualifies, and to what extent, is still open to interpretation and is shaking down in courts all across the state (and country) as we speak.

Will parties under a real estate lease be excused from performing their obligations due to COVID or other “acts of God?”

The general rule in Texas is that an act of God does not relieve the parties of their contractual obligations unless the parties expressly provide otherwise (agree in writing with a contract).

In short, it comes down to what the lease says.

This type of issue is usually addressed in the “Force Majeure” Clause.

Stay tuned for Series Part Two next month where we will discuss the specifics of Force Majeure.

Questions? Email Saeed here.