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Hurricane Irma: Take a Hard Look at the Force Majeure Clauses and Your Business Risks

September 07, 2017

By: Gary M. Kaleita

With Hurricane Irma approaching Florida, people are naturally focused on preparations for its arrival and the potential adverse impacts that it will have. For businesses, that should include analysis of contractual obligations that could be affected by a natural disaster like a hurricane. This is normally covered by “force majeure” clauses in business and real estate contracts.

A “force majeure” clause (French for “superior force”) is a contractual provision that relieves parties from performing their obligations when certain circumstances beyond their control arise, making performance impossible, commercially impracticable, illegal or inadvisable. The wording of such clauses varies, but generally speaking they provide for delays in performance on account of Acts of God, natural disasters, strikes, labor and material shortages, war, acts of terrorism and other major unanticipated events.

Governor Scott declared a State of Emergency in Florida on Monday, and President Trump did likewise on Tuesday, so it can certainly be asserted that grounds already exist for the invocation of force majeure clauses based on the approach of Hurricane Irma.

The force majeure clause of a contract must be examined to determine what events it contemplates, but it is safe to say that the arrival of a major hurricane should be one of them. How will it impact the deadlines that the parties have established to perform their obligations? Consider issues presented by evacuation, closure of businesses (such as consultants, contractors, suppliers, law firms, title companies, banks, delivery services, and courthouses), damage to businesses caused by the hurricane, power outages, flooding and recovery/rebuilding activities, as well as shortages of laborers and materials that frequently follow hurricanes.

It is probably a good idea to examine what deadlines are coming up under your contracts that require the performance of obligations in the next few weeks, and plan for how you might best address them based on the wording of any applicable force majeure clauses and the needs of your business. Consider also what deadlines need to be met by the other parties to those contracts, and how their failure to meet them will affect you and your business.

If you have any questions, please contact Gary Kaleita or any member of our real estate team.


Gary

With more than 30 years of experience in real estate law, including over 20 years as a Board-certified expert in the field, Gary Kaleita has acquired the ability to navigate the complexities of sophisticated real estate deals with relative ease.


Gary has a wide variety of experience in real estate development, finance and transactions, condominiums, property owners’ associations, commercial leasing, commercial lending, and title insurance.

Gary enjoys a reputation for anticipating and avoiding problems, rather than merely reacting to them. He has years of experience handling purchases, sales and financings of commercial and residential projects, including office, industrial, retail, multi-family, single-family, condominium, resort, hotel and golf course properties. Gary has prepared and negotiated contracts for sale and purchase, performed due diligence investigations, and handled all aspects of closings, including issuance of title insurance and legal opinions. He has also performed tax free exchanges (both forward and reverse) under Section 1031 of the Internal Revenue Code, and has handled closings for housing revenue bond financing transactions with the Florida Housing Finance Corporation and various local housing finance authorities.

In the area of real estate development, Gary has assisted developers in obtaining land use approvals, plat approvals and permits for various developments from a number of jurisdictions in Central Florida, including planned developments (PD’s) and Developments of Regional Impact (DRI’s). He has drafted and negotiated complex land use documents, including development agreements, cost-sharing agreements, declarations of covenants, conditions, restrictions and easements. He also has experience in mall and shopping center developments, including outparcels, and has assisted developers with the selection, formation and operation of business entities, including commercial and residential property owners associations. He has extensive experience with the formation and operation of both commercial and residential condominiums as well.

In addition, Gary has established somewhat of a boutique practice by acting as local counsel to help out-of-state lenders, investors and law firms navigate the complexities of Florida real estate law. He is frequently engaged by large national and international law firms needing assistance on a variety of issues for their clients doing business in Florida. Gary regularly provides advice on Florida law and custom pertaining to purchase and sale contracts as well as loan documents, addresses local due diligence issues, answers questions involving titles, surveys and title insurance, and provides Florida legal opinions.

Not just another real estate lawyer, before pursuing his career in law Gary served as a U.S. Naval officer on active duty for 4 years in the Mediterranean Sea, first with a patrol gunboat squadron in Italy and then at a communications station in Greece. During this period he traveled extensively throughout Europe, the Middle East and North Africa. He believes his military experience is the source of the practical approach he has developed to problem solving.

Gary also took the initiative, after a homeowner in his own neighborhood was mauled by a Florida black bear in 2013, of researching what his homeowners’ association could do to limit the likelihood of future attacks. In the process, he became an expert in the subject of “bear-wise” communities and drafted a policy that his own homeowners’ association adopted, thereby becoming the first residential community to be officially recognized as bear-wise by the Florida Fish and Wildlife Conservation Commission (FWC). He has since written and spoken extensively on this subject, serves on the FWC’s Central Bear Management Unit Stakeholder Group, and has become a resource for FWC to educate other communities on the importance of bear-wise practices in areas of Florida containing black bear habitat.

Gary focuses on finding pragmatic solutions to complex problems, recognizing that clients want sensible and realistic advice in a timely manner so they can go about their business.

Chambers USA (2015)* reports that Gary has substantial experience acting as lender’s counsel and is acclaimed by market sources as an “extremely responsive, very practical and reasonable” practitioner.


*We make no guarantees or promises that the reader will realize the same or similar results

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