COVID-19: FORCE MAJEURE AND COMMERCIAL LEASE
Jordan Uditsky • March 21, 2020
As the COVID-19 pandemic continues to affect businesses at every level, dentists and dental offices are no exception. With practices suffering from a sharp decline in patients being treated, dental offices may begin to struggle to continue to timely pay all of their business expenses, including rent. As almost all commercial leases will contain an Act of God or Force Majeure clause, dental tenants or dental landlords may be tempted to invoke these provisions.
However, before invoking the Force Majeure clause, you will want to be sure to check the following:
- Whether your business insurance will cover events related to the COVID-19 pandemic. While not usually the case, some business insurance policies will cover civil actions by governmental authorities.
- All lease requirements in connection with invoking the Force Majeure clause, including timeframe for notice, method of notice and what events can actually trigger the clause.
- The terms of your Force Majeure clause to determine whether the COVID-19 pandemic is likely to be covered. This may not be as straightforward as you think. Instead of language like “national pandemic” or “global disease”, your lease may include events that are, by their nature, out of the control of either the tenant or the landlord.
- The terms of your Force Majeure clause to determine whether it excuses one party from performance or, much more commonly, just provides additional time for such party to perform its responsibilities under the lease. While rent obligations are not typically covered by this, other obligations may be, such as clauses requiring continuous operations, lease commencement or delivery dates, tenant alterations and repairs.
- If rent will be due regardless of whether the Force Majeure clause is invoked. Most commercial leases contain provisions stating that rent shall at all times be payable when due, and no clause in the Lease or any other circumstances will relieve the tenant from such duty to pay.
As the interruptions from the COVID-19 pandemic continue to increase in duration and reach, it is important to consider your options under a commercial lease to best determine the course of action that will expose you to the least amount of liability.
If you are unsure regarding the terms of your commercial lease with respect to what actions you may take, please feel free to contact us at (630) 833-5533 or info@ghulaw.com.
An amendment to the Mechanics Lien Act (the "Act') permits the bonding over of mechanic's liens in the State of Illinois. The bill was signed into law ( 770 ILCS 60/38.1 ) on July 28, 2015, and went into effect on January 1, 2016. This statute is significant because it allows parties to "clear title" to real property that would otherwise be subject to a mechanic's lien. An eligible applicant will be permitted to substitute a bond for the real property subject to the underlying mechanic's lien so that the lien attaches to the bond instead of the real property. Who is Eligible? To take advantage of 770 ILCS 60/38.1 , the party desiring to bond over the lien must be an eligible applicant. The statute defines applicant relatively broadly to include the following parties: An owner; Other lien claimant; A party that has an interest in the property subject to the lien claim; An association representing owners organized under any statute or to which the Common Interest Community Association Act applies; or Any person who may be liable for the payment of the lien claim, including an owner, former owner, association representing owners organized under any statute or to which the Common Interest Community Association Act applies, or the contractor or subcontractor. Process for Filing a Petition To effectively substitute the bond for the real property, the applicant must file a petition with the clerk of the circuit court in the county where the property subject to the underlying lien claim is located. The petition must include the following: The name and address of the applicant and the applicant's attorney, if any; The name and address of the lien claimant; If there is a pending action to enforce the claim, the name of the attorney of record, or if there is no pending claim, but the claim has been recorded, the name of the preparer of the lien claim; The name and address of the owner of record of any real estate subject to the claim or the name and address of the homeowners association or the condominium association; A legal description of the property; A copy of the lien claim; A copy of the proposed eligible surety bond; A certified copy of the surety's certificate of authority from the Department of Insurance or the state agency charged with the duty to issue the certificate; and An undertaking by the applicant to replace the bond with another eligible surety bond in the event that the proposed eligible surety bond ceases to be an eligible bond. After filing a proper petition, the applicant must provide notice and a copy of the petition, either by personal service or certified mail, to every party whose name and address is stated in the petition and the lien party's attorney of record. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise business owners in the Chicago area.
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Welcome to GHU’s newest blog – On the Move: The Future is Now! This blog focuses on legal and policy issues facing the vehicle industry. The future is now for the vehicle industry. Some states (CA and MA) have issued mandates requiring that vehicle manufacturers stop selling new ICE (internal combustion engine) vehicles by 2035. Most legacy vehicle manufacturers have made various announcements stating that their respective product portfolios will move from ICE to zero emission vehicles (EVs) over the next 10-14 years. Another significant issue facing the issue relates to how vehicles are purchased. Over the past several years, Tesla has charted a distribution model that rejects traditional dealerships and uses direct sales and service. Other EV manufacturers like Rivian and Lucid appear to be headed in a similar direction. It is well known that Apple and Amazon have plans to enter the vehicle space as well. Consumers will have a large role in determining how they want to purchase vehicles and vehicle services (much the same as they did with respect to on-demand transportation with the likes of Uber and Lyft). The question is whether traditional manufacturers will be kept on an uneven playing field with these newer market entrants. Finally, autonomous vehicles (AVs) are right around the corner as well. In addition to consumer adoption and acceptance of EVs, it is still unknown how consumers will react to AVs and whether AVs have a large role in America. The future is now. The changes in the industry are happening now and happening at fast pace. This blog will continue to explore issues facing the vehicle industry. For 20 years, Lou Chronowski has represented motor vehicle manufacturers helping them navigate complex laws and regulations and litigating disputes against dealers. If you have any questions, please contact Lou at lchronowski@ghulaw.com .
