Your contract did not mention the word “pandemic,” but COVID-19 still upended your rent payments, construction schedule, or closing date in Philadelphia. Maybe a tenant stopped paying during shutdowns, or a project sat idle while you waited on a city inspection that never came. You are not alone in wondering what those contracts really meant once COVID-19 hit, and what to do with that experience now that you are signing new deals again.
Across Philadelphia, landlords, tenants, developers, and investors discovered that the fine print they barely noticed controlled whether they had leverage, room to negotiate, or almost no protection at all. Some contracts gave breathing room when government orders shut doors or slowed approvals. Others left parties arguing over email chains and handshakes. Understanding how contract laws and COVID-19 interact in Philadelphia is no longer a theoretical exercise, it directly affects what you risk in the next disruption.
At Pritzker Law Group, we focus our work on real estate in Philadelphia, Pennsylvania, New Jersey, and the surrounding counties. Our team handles transactions, development, land acquisition, zoning, and disputes, and we work closely with city agencies from conception to completion of a project. That perspective, combined with our experience on bodies like the Philadelphia City Council and the Zoning Board of Adjustment, gave us a front-row view of how COVID-19 tested contracts in this city. In this guide, we share what that experience means for the agreements you are dealing with now.
How COVID-19 Collided With Philadelphia Contracts
When COVID-19 restrictions rolled out in Philadelphia, contracts did not stop existing. Instead, parties had to run those unprecedented events through documents that were often drafted with very different risks in mind. Commercial tenants saw mandatory closures and capacity limits, but leases still called for full rent on the first of the month. Developers faced construction pauses and remote operations at departments that handle permits and inspections, while their contracts still listed firm milestone dates tied to financing and contractor payments.
We saw a few recurring patterns. Many commercial leases had broad boilerplate language about “acts of God” or “governmental action,” but nothing that squarely addressed a months-long public health emergency or citywide business shutdown. Some development agreements assumed that zoning, permitting, and approval timelines in Philadelphia would track pre-pandemic experience, so even a modest slowdown at a key agency triggered a chain reaction of missed deadlines. In other cases, parties had never considered how a lender or equity partner would react if rental income disappeared overnight.
Under Pennsylvania law, the starting point is almost always the written contract. Courts and arbitrators typically ask what risks the parties allocated to each other in that document, then consider how background doctrines, like impossibility and frustration of purpose, might apply to fill any gaps. During COVID-19, that meant decision makers in Philadelphia were applying long-standing contract principles to a new fact pattern, and outcomes depended heavily on the specific wording, the type of property, and how each side documented what happened. That is why two landlords on the same block could have very different results, even though they both faced similar shutdown orders.
Because our team delivers most services in-house and stays involved from land acquisition and zoning through leasing and sale, we had to help clients work through these problems across the life cycle of their projects. That experience informs how we now draft and negotiate contracts so they reflect what actually happened in Philadelphia during COVID-19, instead of what people assumed would always be true when they signed older forms.
Force Majeure Clauses After COVID-19 in Philadelphia Agreements
Before COVID-19, many force majeure clauses in Philadelphia leases and contracts were treated as standard boilerplate. They listed events like fires, floods, wars, and sometimes “governmental regulations” that could excuse or delay performance. When the pandemic hit, those provisions suddenly mattered a great deal, and people learned that not every clause functioned the way they expected. Some landlords and tenants assumed any major disruption would qualify. Others discovered that their clause was missing key language that would tie COVID-19 to relief.
At its core, a force majeure clause is an agreement about what happens if certain extraordinary events occur that neither party controls. Under Pennsylvania law, courts usually interpret these clauses based on their actual words. If “disease,” “epidemic,” “pandemic,” or “public health emergency” do not appear, parties may try to argue that COVID-19 falls under broader categories like “acts of God” or “governmental orders,” but those arguments are not automatic wins. Judges and arbitrators look closely at whether the event truly prevented the promised performance, whether the party gave the required notice, and whether they tried to mitigate the problem.
In practical terms, we saw scenarios where a Philadelphia restaurant tenant invoked force majeure once indoor dining was limited or banned, claiming that rent payments should be excused. A landlord might respond that the clause limited relief to the landlord’s own obligations, or that loss of revenue did not make it impossible to pay rent, only harder. In a development contract, a contractor might point to delayed inspections and changed office operations at city departments as a force majeure event that justified extending completion dates. Whether those positions stuck often turned on details like how the clause defined “delay,” whether monetary obligations were carved out, and whether government actions were explicitly listed.
In current deals, sophisticated parties in Philadelphia are revising force majeure language to remove uncertainty. Many clauses now reference “epidemic, pandemic, public health emergency, or outbreaks of communicable disease, including associated governmental orders and restrictions” and then spell out which obligations may be delayed, for how long, and with what notice. Some clients choose to state that force majeure will not excuse rent payment, but may justify delays in opening or construction, paired with separate negotiated rent deferrals or abatements. Others allocate the risk differently based on the property type and bargaining power.
Because our practice focuses on real estate projects at every stage, we are frequently engaged to review older force majeure clauses against what actually occurred in 2020 and 2021, then update those provisions in new leases, purchase agreements, and construction contracts. The goal is not to anticipate every scenario, but to write clear, Philadelphia-tested language so that both parties understand how a future emergency will, and will not, affect performance.
Impossibility & Frustration of Purpose in Pennsylvania Contracts
Not every contract in Philadelphia contained a helpful force majeure clause when COVID-19 arrived. In those cases, parties often turned to common law doctrines like impossibility, impracticability, and frustration of purpose. These are established concepts under Pennsylvania law, but COVID-19 put them to the test. Many landlords and tenants heard these terms in passing and assumed they would either fully rescue or completely doom their contracts. In reality, the standards are narrow and very fact specific.
Impossibility or impracticability focuses on whether performance has become objectively impossible, or extremely difficult, because of an event the parties did not anticipate and cannot control. For example, if a specific building in Philadelphia was condemned after a COVID-19 related incident, and a contract required events to be held only at that location, performance might be impossible. By contrast, general financial hardship, even severe hardship caused by a drop in revenue during shutdowns, usually does not meet this standard. Courts tend to ask whether the performing party could still technically do what it promised, even if it is much harder to do so.
Frustration of purpose is slightly different. It asks whether the central reason both parties entered the contract has been destroyed by an unforeseen event, even if literal performance is still possible. Consider a hypothetical lease of a Center City space specifically negotiated as a live music venue, with marketing and build-out focused on that use. When emergency orders in Philadelphia banned live performances for an extended period, the tenant might argue that the basic purpose of the lease was frustrated. On the other hand, an office tenant whose employees could work remotely during the same period would face a tougher argument. The core purpose of having office space, to house the business, may not be considered destroyed, just temporarily less efficient.
These doctrines do not operate as broad fairness corrections when contracts feel harsh. They are safety valves that courts apply cautiously, and they are shaped by how the parties allocated risk in the written agreement. In COVID-era disputes in and around Philadelphia, decision makers looked at how narrowly the lease or contract defined the permitted use, what the parties knew about potential disruptions, and whether they had already addressed similar risks in other sections of the document. Because our team regularly handles dispute resolution in real estate matters, we spend significant time walking clients through these distinctions, evaluating whether impossibility or frustration arguments are realistic leverage in negotiation, or more likely to fall flat if pushed into litigation.
One practical lesson is that relying on these doctrines after a crisis starts is far less predictable than planning for risk in the contract itself. The more precisely you define the purpose, uses, and risk allocation up front, the less you have to lean on doctrines that Pennsylvania courts apply cautiously. That is a key theme we encourage clients to carry into their next round of drafting.
How COVID-19 Changed Philadelphia Leases for Landlords & Tenants
COVID-19 exposed specific weak points in Philadelphia commercial and residential leases. For commercial landlords and tenants, the stress often centered on rent obligations and permitted use. Many leases did not clearly state what would happen if government orders limited or banned the tenant’s core business activities. Some tenants argued that they could not lawfully operate and should not owe full rent. Landlords pointed to black-and-white rent clauses and noted that the building still existed, utilities were available, and the space could, in theory, be used once restrictions eased.
Issues like rent abatement, rent deferral, and modification of use clauses moved from abstract negotiation points to urgent business decisions. In the commercial context, parties in Philadelphia often negotiated short-term abatements tied to reopening milestones, longer repayment schedules for deferred amounts, or changes in operating hours and delivery rights. Disputes also arose around common area obligations, access rights, and building rules as property owners tried to manage public health guidance within multi-tenant buildings. Where leases were drafted tightly around a single use, such as indoor dining, tenants often had more leverage to argue that the deal no longer matched reality.
Residential leases in Philadelphia faced a different set of pressures. Temporary eviction moratoria and changing court procedures meant that nonpayment of rent could not be addressed through standard timelines. Tenants raised health and safety concerns related to common areas, building amenities, and maintenance visits. Landlords had to balance compliance with emergency orders, protection of residents, and the financial needs of maintaining the property. Leases that were silent on access limitations or temporary closures of amenities, like gyms or lounges, left both sides arguing over expectations rather than clear terms.
In new leases, both commercial and residential, we are seeing and helping craft more detailed provisions on several fronts. These include clauses that specify how rent and operating expenses will be treated if government orders materially limit use, how long temporary closures can last before either party can trigger discussions or termination, and what happens to shared spaces and services in public health emergencies. Insurance and business interruption coverage are also coming up more frequently in negotiation, with parties clarifying who will pursue claims and how any proceeds factor into rent and operating obligations.
Because Pritzker Law Group combines real estate transaction work with a commitment to community engagement as a Certified Women’s Business Enterprise, we are often asked to help structure leases that both protect long-term property interests and support stable tenancies for residents and small businesses. COVID-19 underscored that a lease that collapses at the first external shock is not in anyone’s best interest. Thoughtful drafting in Philadelphia leases now often includes pathways for temporary adjustments that keep properties occupied and communities functioning, without leaving owners unprotected.
Development & Construction Contracts Under Pandemic Pressure
For developers and construction stakeholders in Philadelphia, COVID-19 disruptions played out differently than in leasing. Here, the most serious problems often came from extended permitting times, delayed inspections, and shifting operating procedures at city agencies involved in zoning and land use. Contracts that assumed a predictable sequence of approvals quickly ran into trouble as offices closed, staff worked remotely, and backlogs grew. Each missed zoning hearing date or inspection ripple could push back financing draws, contractor payments, and delivery dates promised to tenants or buyers.
Typical development and construction contracts tie payments and obligations to specific milestones, such as completion of foundation work, issuance of a framing inspection approval, or obtaining a final certificate of occupancy. When city departments in Philadelphia changed schedules or limited in-person work, even temporarily, those milestones became moving targets. If the contract did not clearly allocate the risk of government-caused delay, disputes arose over who should absorb increased carrying costs, labor standby charges, or material price escalations. COVID-19 also intersected with existing issues like utility coordination and community review processes, making realistic timeline planning even more critical.
Beyond agencies, the pandemic stressed supply chains and the labor market. Contractors faced shortages of certain materials, unexpected price spikes, and workforce disruptions. Fixed-price contracts that had looked attractive pre-pandemic suddenly became difficult to perform, leading to requests for change orders or renegotiation. Owners and lenders, facing their own pressures, were not always willing to adjust. Where contracts contained flexible price adjustment mechanisms or clear force majeure clauses that included government and supply chain disruptions, parties had a more structured path to address these problems. Others were left to piece together ad hoc agreements while trying to keep projects alive.
As we work with clients on new projects, we focus heavily on aligning contract language with how Philadelphia approvals and construction actually unfold. Drawing on our experience with the Philadelphia City Council and the Zoning Board of Adjustment, and our ongoing relationships with city agencies, we have a practical sense of how policy decisions and staffing levels translate into real-world timelines. We encourage clients to build in realistic buffers around zoning hearings, building permit reviews, and inspection schedules, and to tie milestone dates to definable events, such as “a set number of days after issuance of a specific approval,” rather than fixed calendar dates alone.
We also see more owners and contractors in Philadelphia adopting contract tools that respond directly to COVID-19 lessons, including escalation clauses for key materials, more detailed force majeure language that references government restrictions and supply disruptions, and structured processes for adjusting the schedule when agency or health measures interfere with planned work. By integrating these concepts from the outset, rather than trying to improvise during the next disruption, development and construction contracts can better protect both the project and the relationships that support it.
Lessons From COVID-19 for Contracts You Are Signing Now
The most valuable outcome of COVID-19 for contract planning is not a list of horror stories, but a clearer picture of where documents held up and where they failed. In Philadelphia, parties who had thought carefully about government actions, approval timelines, and emergency scenarios generally had more options and fewer surprises. Those lessons can, and should, be built into the contracts you negotiate today, whether you are signing a single lease or structuring a multi-phase development.
We often walk clients through a simple thought exercise. If your current deal had been in place in early 2020, how would each key provision have performed in the months that followed? Would your rent language, milestone schedule, or closing conditions have left you with leverage, or exposed you to risk you never intended to take? That hindsight is not about blame. It is about using real experience in Philadelphia to improve the clarity and resilience of your next agreement.
Some of the practical adjustments we see in new contracts include:
- Tailored force majeure clauses. Instead of generic references to acts of God, parties now often list events like pandemics, public health emergencies, and government-ordered closures, and clarify which obligations can be delayed, for how long, and what happens if delays cross certain thresholds.
- More precise timelines. Schedules are tied to real approval events, such as issuance of zoning variances or building permits in Philadelphia, with built-in allowances for documented government delay instead of assuming smooth processing.
- Clear notice and documentation requirements. Contracts spell out how and when a party must notify the other of a disruption and what evidence they must provide, which reduces disputes about whether force majeure or similar relief was properly invoked.
- Risk-sharing mechanisms. Parties may agree in advance how to handle extended shutdowns, such as temporary rent abatement with repayment terms, shared cost increases on materials, or negotiated exit ramps if core assumptions about use or timing fail.
- Insurance and financing awareness. Agreements more often address how insurance coverage, lender requirements, and covenants interact with emergency events, so that the contract does not promise relief that financing or insurance structures will not support.
Because Pritzker Law Group delivers most services in-house, from acquisition documents and zoning applications through construction contracts and leases, we can align these adjustments across an entire project instead of treating each contract as an island. That coordination helps ensure that your development agreement, loan documents, contractor contracts, and tenant leases in Philadelphia tell a consistent story about who bears which risks in the next disruption.
When a COVID-19 Contract Dispute Becomes a Legal Problem
Even as new deals adapt, many property owners, tenants, and developers in Philadelphia are still dealing with disputes that trace back to COVID-19 impacts. Some landlords and tenants are locked in continuing disagreements about arrears from shutdown periods. Developers may be facing claims from contractors over delay costs that tie directly to agency slowdowns or earlier site shutdowns. Partners and lenders may disagree about whether pandemic-related events triggered default provisions in operating agreements or loan documents.
Recognizing when a situation has moved from a business conversation into a legal problem is not always easy. Red flags include repeated but stalled negotiations over unpaid rent or invoices, threats of litigation or default notices, refusal to honor previously agreed extensions, or disputes about whether a force majeure or similar notice was valid. When these issues arise, the dispute often cannot be resolved by re-reading a single clause in isolation. A thorough review usually requires examining the entire contract, any amendments, correspondence during the critical period, and any related documents like loan agreements or subcontracts.
When we evaluate a COVID-19 related contract dispute, we typically look at several layers. First, we ask what the written agreement actually says about the obligation at issue, and about events like government orders or disruptions. Second, we consider whether either party sent timely and compliant notices when conditions changed, and whether there is a record of how both sides responded. Third, we assess whether there are realistic arguments under doctrines like impossibility or frustration of purpose, or under implied obligations of good faith and fair dealing, given Pennsylvania law. Finally, we look at the broader commercial context, including ongoing relationships, financing structures, and the cost and time involved in litigation compared with negotiation.
Our goal in these situations is not only to map out theoretical legal positions, but to find practical ways forward. Because we work regularly on transactions, development, zoning, and disputes in Philadelphia, we understand how a solution in one agreement may affect obligations elsewhere in the capital stack or project structure. Often, the best outcome involves negotiated amendments, workouts, or structured settlements that adjust timelines or payment terms without collapsing the deal. In other cases, firm enforcement or defense may be necessary to protect an investment.
If you are unsure whether your COVID-19 era dispute has crossed into the territory where you need legal guidance, a focused review can help you understand your options, your risks, and where you have leverage. Addressing these issues with a clear strategy is usually more effective than letting them linger in informal conversations or inconsistent partial agreements.
Plan Stronger Philadelphia Contracts With COVID-19 Lessons In Mind
COVID-19 forced every part of the Philadelphia real estate world to find out, often the hard way, how contracts behave under stress. Some clauses performed as intended. Others left parties scrambling. Those experiences do not need to go to waste. They can inform smarter drafting, more realistic timelines, and fairer risk-sharing in the agreements you sign now, whether you are working on a single building or a multi-property portfolio.
At Pritzker Law Group, we bring our full-service real estate practice, our in-house coordination across development stages, and our relationships with Philadelphia agencies to help clients evaluate existing contracts and design new ones that reflect what we have all learned. If you are negotiating a lease, purchase, development agreement, or facing a dispute touched by COVID-19, we can walk through what your documents actually say, how Pennsylvania law views your options, and what steps can protect your position in the next disruption.
Call (215) 515-0882 to discuss how COVID-19 affects your Philadelphia contracts and what you can do about it today.