Force Majeure Clauses in Real Estate Transactions

What is force majeure? Definition and examples - Market Business News

The question arising frequently in discussions is whether “force majeure” is triggered in real estate transactions because of COVID -19 and/or a suddem market decrease as in 2017 and 2022.

If we are talking about Ontario, the answer would be “no”.

There simply is no force majeure clause in the Standard Form OREA Agreement of Purchase and Sale.

Further, it doesn’t exist as a clause in WebForms.

The result is that Ontario real estate transactions do not include force majeure clauses. So, they can’t be triggered by anything, let alone COVID-19.

Many real estate agents are seeking to either extend the closing date or terminate a transaction due to force majeure. Unless, very creatively, such a clause were added specifically to the Agreement, then it would simply not be there, meaning that you cannot rely on it.

Typically, these clauses apply to supply chain contracts. If one party cannot for reasons completely beyond their control, obtain the various components, then they cannot be expected to assemble and deliver the finished product.

A real estate transaction is not a supply chain contract. There’s no necessity for a force majeure clause to be included, so it’s simply not there.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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