Why Misusing the Force Majeure Clause Can Erode Trust in the Real Estate Market
- Mar 19
- 3 min read
Al Fouad Group is a leading real estate consultancy specializing in valuation, development advisory, and investment strategies, alongside City Creek Contracting. The Group provides expert guidance to investors and developers across luxury and high-growth real estate markets.
In real estate and large-scale development projects, contracts are more than legal documents, they are the foundation of trust between developers, investors, contractors, and buyers. Every major project relies on a shared understanding, commitments will be honored, timelines respected, and responsibilities fulfilled.
However, the world occasionally faces extraordinary circumstances. Wars, pandemics, natural disasters, and sudden regulatory changes can disrupt even the most carefully planned projects. This is precisely why most commercial contracts include a clause known as Force Majeure. The purpose of Force Majeure is clear and legitimate, to protect parties when unpredictable and uncontrollable events make performance impossible.
But across many global markets today, the challenge is not the existence of this clause. The challenge is its misuse.
Force majeure is not a shield for poor management
Delays caused by weak planning, poor financial structuring, or operational mismanagement should never be classified as Force Majeure. If a project suffers because financing was not properly secured, contractors were poorly coordinated, or project risks were underestimated, the problem lies in management decisions, not extraordinary events. Force Majeure exists to address external shocks, not internal failures.
Market fluctuations are not force majeure
Every experienced investor understands that markets evolve. Construction costs rise, supply chains shift, interest rates change, and buyer demand fluctuates. These are not exceptional events. They are normal market dynamics. Attempting to categorize ordinary commercial risks as Force Majeure weakens contractual discipline and undermines confidence in the market.
Transparency is essential when force majeure occurs
When genuine Force Majeure events arise, transparency becomes critical.
Developers and project stakeholders must clearly explain:
What event occurred
How it impacted the project
Why the event made contractual performance impossible or severely restricted
Clear communication protects investor confidence, while silence and ambiguity destroy it.
Misusing force majeure can damage reputation
In some cases, parties attempt to invoke Force Majeure as a negotiation tool to delay obligations or alter contractual terms. While this may provide temporary relief, it often leads to long-term reputational consequences. In real estate, reputation is one of the most valuable assets a developer or investor can possess. Markets remember who honored their commitments, and who attempted to avoid them.
Force majeure must remain what it was designed to be
Force Majeure was designed to address truly extraordinary circumstances beyond human control. When applied responsibly, it protects projects, investors, and developers alike. But when misused, it becomes something far more damaging, a legal excuse that erodes confidence in the market itself.
Final thought
Strong real estate markets are not built only on landmark projects or iconic skylines. They are built on trust, credibility, and respect for contractual obligations. Force Majeure should remain a safeguard for genuine crises, not a place to hide from responsibility.
Read more from Mohamed Ahmed Fouad Amin
Mohamed Ahmed Fouad Amin, Owner of Alfouad Group
Mohamed Ahmed Fouad Amin is a real estate expert, author, and investment consultant with extensive experience in valuation and development advisory across the UAE and MENA region. He is the founder of Al Fouad Real Estate Valuation and a member of FIABCI and ACAMS. Mohamed specializes in guiding investors, analyzing developers, and identifying high-value opportunities. He authored “Sell a Property to Billionaires” and “Please, Don’t Buy From This Developer,” empowering investors with clarity and confidence.
