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Everything You Need to Know About the Commercial Lease Agreement in Maine
A commercial lease agreement is a legal contract created between a landlord and a tenant or a lessor and a lessee. Once signed, it’s legally binding. It shows that the landlord is giving the tenant the right to run their business in the commercial property for a specified lease term and the landlord will receive a specific amount of money as rent for the use of the space.
Using a commercial lease agreement in Maine, the responsibilities of the tenant and the landlord are clearly outlined. In the statutes, under Title 14, Part 7, Chapter 709 and Section 6017, the agreement will only be used if the commercial entity is a profitable business. What this means is that charitable organizations, non-profits, or religious organizations may not be considered for the commercial tenancies. The state laws have also made it clear that the lease created must comply with both federal and state laws applicable, and that the lease is considered a legally binding contract. As a result, you must take time to create, review, and negotiate the terms of the lease before anyone signs it.
The basic elements of the commercial lease
Description of the property being leased
Address of the proper
The term of the lease
Rent payable and frequency of paying the rent
Permitted uses of the space
The ownership of leasehold improvements
Provisions for damage and security deposit
Lease renewal, renovations, termination, and relocations provisions
Subleasing and assignment
Types of commercial leases
• Full Service or Gross Lease
In this lease, the tenant’s rental payments are inclusive of payments for utilities, janitorial services, maintenance, and other expenses necessary for the maintenance of the commercial property. In some cases, the landlord agrees to pay for the repairs, utilities, and even insurance. The amount charged is fixed and predictable.
• Net Lease
This lease comes with square-footage costs, ownership expenses like taxes and insurance, and CAM (common area maintenance) costs. It may also include the cost of utilities and repairs.
Under the net lease, the triple net lease is the most common lease tenants sign up for. If you take a triple net lease, it means that you will be paying all the above expenses (taxes, insurance, utilities, and CAM) on top of the base rent.
• Modified Gross Lease
This is a lease that carries the properties of the gross and the net lease. On top of the base rent, the tenant also pays a portion of the property maintenance costs.
• Percentage Lease
If you are looking for commercial space in a shopping center or a mall, you may have to sign a percentage lease. In this arrangement, the tenant pays a percentage of their gross income as well as the base rent to the landlord periodically.
• Fixed Term Lease
In this arrangement, you sign up for a lease that has a predetermined end date. In other cases, the tenancy ends after a specific number of weeks, months or years. Under this lease, the landlord cannot change the terms of the lease or raise the rent unless you signed up for the lease knowing that the landlord has express rights to change the terms of the lease. If at the end of the lease, the tenant stays on, the landlord may accept payments under the old terms, ask the tenant to sign a new lease or start the eviction process.
When the lease’s termination term is predetermined by weeks, months or years, either party has to issue a termination notice.
• Periodic lease
This lease is also called an automatic renewal lease. In this arrangement, the lease runs its course until one party terminates the lease. With a written notice issued according to the terms of the statutes, the landlord can change the terms of the lease at any time or even raise the rent.
When signing the lease, you will see the term escalations. It is a legally acceptable provision that allows landlords to increase rent by a certain percentage, the amount per square footage, or using an indexed figure to cover the effects of inflation.
Escalations are also beneficial to tenants because they allow them to start paying rent at lower rates at the beginning of the lease.
The tenant improvement is a predetermined construction allowance that the landlord gives the tenant. The amount is quoted per square foot. Note that negotiating for better terms of the lease improvement in a commercial space with high demand will be difficult. Keep in mind that your tenant improvement fee also varies depending on the condition of that space, concessions, and your creditworthiness.
According to the ADA, the landlord and the tenants should ensure that the building is accessible to all the disabled persons. Since a tenant might have to make significant renovations, you should ensure that the lease names the person responsible for the improvements. In your Maine commercial lease agreement, just like in lease contracts drawn in other states, the landlord should cover ADA improvement costs.
The lease should be specific about the terms of subleasing, stating whether it’s acceptable or not.
Are you looking for a commercial lease in Portland, Bangor, Bar Harbor, Camden, Rockland, Wells, Saco or any other city in Maine? Download our free commercial lease agreement forms online to get started today.