What is force majeure in real estate?

In real estate, force majeure refers to a contractual clause that allows parties to suspend or terminate their obligations when certain events beyond their control occur, making performance inadvisable, commercially impracticable, illegal, or impossible. These events, known as force majeure events, typically include natural disasters (like hurricanes, floods, earthquakes), wars, terrorism, strikes, pandemics, and government actions or laws that prevent or delay the parties from fulfilling their contractual duties.

The purpose of a force majeure clause in real estate contracts (such as leases, purchase agreements, or construction contracts) is to protect the parties from penalties for failing to meet their obligations due to these extraordinary events. The specific protections and mechanisms for triggering the clause vary by contract, and the applicability of force majeure to a particular situation depends on the contract's language and the jurisdiction's laws. It's crucial for real estate contracts to clearly define what constitutes a force majeure event, the scope of relief provided (such as extensions for performance deadlines or termination rights), and the procedures for notifying parties and claiming protection under the clause.

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