Force Majeure: A Step-by-Step Analysis

By: Michael T. Hankin, Board Certified Real Estate Attorney, Hankin & Hankin

Hu rricane season is right around the corner, and although your home may lose power, you won’t be left in the dark about the effects of the storm on your pending transaction if you have this article handy. Both the FAR-BAR As-Is

Contract and the FAR-BAR Standard Contract contain a force majeure clause in Paragraph 18.G, which addresses hurricanes and other actions outside of the buyer’s and seller’s control, which prevent them from exercising their rights or performing their obligations.

The flowchart below is a visual representation of the clause and depicts the analysis which should be made whenever a Buyer or Seller is unable to perform due to circumstances outside of their control.

To learn more, join the Hurricane Preparedness Panel discussion on June 6 at 2:00 p.m. at RASM North. •

FORCE MAJEURE FLOWCHART:

Was there a hurricane, flood, extreme weather, earthquake, fire, or other act of God, unusual transportation delay, war, insurrection, civil unrest, or act of terrorism, government action, government mandate, a government shutdown, epidemic, or pandemic?

Did the event result in disruption, delay, or prevention of services, insurance, or required approvals essential to closing or result in the buyer or seller being unable to exercise their rights or perform their obligations under the contract?

Was the non-performing party, through the exercise of reasonable diligent effort, unable to perform?

All contract time periods are extended to a reasonable time (up to seven days after the event no longer prevents performance). If the event continues to prevent performance for more than thirty days beyond the closing date, then either the buyer or seller can cancel the contract, and the buyer will be refunded their deposit.

The rights and obligations of the buyer and seller continue and are unaffected by the event.

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