Commercial Leases - Force Majeure Clauses - Required
Impact
The implementation of HB1220 is expected to significantly affect commercial real estate laws in Maryland. By standardizing force majeure conditions in commercial leases, the bill provides clarity for both landlords and tenants regarding their obligations during extraordinary circumstances. This measure is especially relevant in the context of recent global events, such as the COVID-19 pandemic, which highlighted the vulnerabilities in leasing agreements without explicit terms for unforeseen disruptions.
Summary
House Bill 1220, introduced by Delegate Conaway, mandates the inclusion of force majeure clauses in commercial leases within Maryland. This requirement aims to provide a framework that allocates risk for events beyond the control of either party, such as natural disasters or public health emergencies. The bill specifies that these clauses must identify covered events and outline the responsibilities and relief options for both lessors and lessees if performance of the lease is hindered or prevented due to such events.
Contention
While HB1220 aims to offer protection and clarity for commercial tenants, it could face pushback from landlords who may see mandatory force majeure clauses as an infringement on their rights to negotiate lease terms freely. There may be concerns that the requirement could lead to disputes over the interpretation of what constitutes a force majeure event and what relief measures should be afforded under these clauses. Additionally, the bill includes provisions that relate specifically to declarations of emergencies, which may raise questions about the government's role in regulating private contracts.