Considering an Extension

Considering an Extension and Default

Here's the letter from which we learned that the developer had requested an extension, and why.

Force Majeure -- That's French for "greater or irresistable force" and it's the legal term for what most of us know as "war and acts of God" clauses. There's a surprising amount of case law surrounding this issue, as a few hours on Google will demonstrate. Some of the basic points are:

The courts have required that impediments to contractual duties must be directly, not secondarily, related to the events in question. Thus a secondary effect like a downturn in the hospitality industry does not qualify under force majeure clauses.
The impediments must be absolute, not relative. That is, an event must make it impossible ... not just financially unattractive ... to fulfill the terms of the contract. Though we don't know the details of the developer's financing problems, it would seem that requirements for a higher downpayment or for a higher interest payment would not qualify for consideration under force majeure clauses.
The courts have previously considered terrorist acts and have narrowly interpreted "war" to mean "hostilities between entities with significant attributes of sovereignty." That is, no matter how horrible the attacks of 9/11, they aren't considered "war" for considerations of force majeure.

General considerations -- If you want to crawl through the details of State law and the development agreement as they apply to the situation currently before the Supervisors, this is the document to read.