Maine Commercial Lease Agreement Template
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A Maine Commercial Lease Agreement materializes as a mutual obligation between you (the tenant) and your landlord. This covenant grants you the license to occupy a facility for your business endeavors, for a defined term and cost. It's customized to the precise practices your commerce proposes to execute on the premises. Ascertain your comprehension of all its contents before affixing your signature.
What are the related laws for Commercial Lease Agreements in Maine?
Title 14, Chapter 710 of the Maine Revised Statutes particularly addresses matters relating to rental properties. This encompasses assorted procedures, conceptualizations, and conditions that rule over the formation, alteration, fulfillment, and violation of lease contracts.
As depicted in certain portions of the chapter:
- Section 14 §6021 elucidates definitions, specifying a range of terms associated with lease agreements and their corresponding interpretations.
- Section 14 §6028 takes charge of circumstances of delayed rent payment, detailing how these situations are treated and under which conditions they lead to penalties.
- Section 14 §6030 is in-charge of laying down the fundamentals in resolving issues related to unfair agreements. It mentions that these agreements can result in specific restrictions and penalties.
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How to write a Commercial Lease Agreement
As a business proprietor, the intricate legal terminology may seem overwhelming. Nonetheless, equipped with a lucid plan and proper direction, you can assuredly devise your lease contract. Let's delve into the fundamentals of a commercial lease agreement and learn how to adapt it to your requirements - envision this as your amiable, uncomplicated manual for commercial lease mastery.
1. Permitted Uses
The "Authorized Uses" provision details the intended application of the leased facility. It explicitly enumerates the permitted endeavors. Among these are manufacturing operations, administrative tasks, warehousing, supply chain functions, and the production and dissemination of goods.
It's vital to correctly represent all your proposed business functions in this section. This transparency aids in circumventing potential legal complications and assures effective resource distribution. Incorporate every specification to prevent unforeseen setbacks. This comprehension maintains your enterprise's trajectory.
Industrial and light manufacturing, warehousing, office, distribution, and assembly, including designing, manufacturing and distributing branded merchandise and promotional products, including all activities incident or ancillary thereto and all other lawful uses and purposes.
2. Term and Option to Extend
(a) This pertains to the lease duration and extension possibilities. It commences on the Effective Date and ceases on the Expiration Date. You have the option to prolong it for two additional two-year intervals under equivalent conditions, although rent could potentially rise. Inform the landlord in writing 30 days prior to the term's conclusion to extend.
(b) "Term" signifies the initial lease period along with any subsequent extensions.
Precise lease terms are vital for orchestrating enterprise plans and running operations seamlessly. They also play a crucial role in possible lease extensions.
(a) The initial term of this Lease will commence on the Effective Date and expire on the Expiration Date. The Tenant may extend the Term of this Lease for [two] additional [two]-year extension term(s), on all the same terms and conditions (except for Rent, which will increase during extension Terms as provided below) contained in this Lease, by notifying the Landlord in writing of the Tenant’s election to do so not less than 30 days before the expiration date of the then-current Term, as the case may be.
(b) The initial term and any applicable extension term are referred to in this Lease as the “Term.”
3. Repairs and Maintenance
The "Maintenance and Upkeep" provision elucidates the responsibility for repair handling. It encompasses both indoor and outdoor problems, such as defective piping or damaged masonry. The expenditure is borne by the landlord, not you.
If a maintenance issue isn't remedied promptly, you have the authority to arrange for repair work and deduct the cost from your rent. It is crucial to document such instances for future reference. This provision is key, as it outlines repair obligations and shields you from unforeseen costs.
From and after the Effective Date, and for the remainder of the Term, the Landlord shall perform ordinary maintenance and repair of the interior of the improvements on the Premises. In addition, the Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to, the exterior walls, building slabs, foundations, structural parts and components, parking lots, gutters, downspouts, roof, roof membrane and coverings and any other part, component or system on the exterior of the Premises. The Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to the sprinkler system, mechanical, HVAC, electrical and plumbing systems of the Premises. If the Landlord fails to perform any repair or replacement required to be made by the Landlord in this Lease, and the Landlord fails to cure such failure within 15 days after receipt of a written demand from the Tenant (or immediately, in the case of emergency repairs, including loss of heating and air conditioning), then the Tenant may make such repair or replacement and the Landlord shall reimburse the Tenant for the cost thereof. If the Landlord fails to pay such amount, then the Tenant may offset against the Rent due hereunder the amount so expended.
4. Alterations
"Modifications" outlines your rights to amend the leased area. You have the freedom to effect changes without obtaining the landlord's agreement, yet large-scale amendments revert to the landlord's ownership. You're welcome to remove personal items such as shelving or equipment, provided it doesn’t cause harm to the property. Grasping this provision can avert disagreements and aid you in strategizing your business arrangement efficiently.
The Tenant may, at its own cost and expense and in a good workmanlike manner, make such alterations, additions, or improvements or erect, remove, or alter such partitions, or erect such racks, shelves, bins, machinery, furniture, fixtures, trade fixtures, equipment, and other personal property as it may deem advisable, without the consent of the Landlord. All fixtures and permanent alterations, additions, improvements, and partitions erected by the Tenant will be and remain the property of the Landlord during the Term, and will be abandoned by the Tenant at the expiration of this Lease. All racks, shelves, bins, machinery, furniture, equipment, and other personal property located in the Premises as of the Effective Date or otherwise installed by the Tenant may be removed by the Tenant at any time if the Tenant so elects. All such removals and restoration shall be accomplished so as not to damage the primary structure or structural qualities of the buildings and other improvements situated on the Premises.
5. Insurance
The "Insurance" provision safeguards both lessee and lessor. As the lessee, you require property and liability insurance, listing the lessor as additional insured. The lessor, on the other hand, is responsible for insurance covering damage to the premises.
"Subrogation waivers" prevent insurance providers from pursuing the other party for compensation following a loss. Make sure your insurer sends a notification to the lessor 30 days in advance if your policy is to be terminated. Familiarizing yourself with these terms will ensure your venture remains financially secure.
(a) At all times during the Term, the Tenant shall maintain, at its sole cost and expense, policies of insurance containing the following insurance coverages (which policies shall name the Landlord as an additional insured):
(1) Property insurance with premiums paid in advance insuring the Tenant’s property using the standard Special Causes of Loss Form or equivalent for the full replacement value. The foregoing is referred to in this Lease as “Property Insurance.”
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(2) Commercial general liability insurance with respect to the Premises in amounts not less than $1,000,000 per occurrence, $2,000,000 aggregate limit using current ISO forms or equivalent.
(b) The Landlord shall obtain and keep in force during the Term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, as the same may exist from time to time, but in no event less than the total amount required by lenders having liens on the Premises, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Property), and special extended perils ("all risk" as such term is used in the insurance industry). Such insurance must provide for a payment of loss thereunder to the Landlord or to the holder of mortgages or deeds of trust on the Premises.
(c) The policies required by this section must provide for standard waivers of any right of subrogation that the insurer of such party may acquire against the other party to this Lease, for losses that are actually insured against, even if the loss results from a negligent act or omission. The Tenant’s insurance company must provide the Landlord with a certificate of insurance on form ACORD-27 (for Property Insurance required to be carried under this Lease), or its equivalent, and ACORD-25 (for liability insurance required to be carried under this Lease), or its equivalent, which provides that the insurance may not be cancelled without giving the named insured at least 30 days’ prior written notice (or at least ten days’ written notice of cancellation in the event of the non-payment of premium). The Tenant may carry any required insurance under a blanket policy if that policy complies with the requirements of this Lease.
6. Events of Default
The "Incidents of Default" provision outlines activities identified as violations of your lease. Common incidents encompass neglecting rent dues, encountering bankruptcy, or not adhering to lease conditions. Stay vigilant of this segment and evade these traps to foster a positive rapport with your landlord and manage your business efficiently.
The following events will be deemed to be Events of Default by the Tenant under this Lease:
(1) The Tenant fails to pay any installment of the Rent hereby reserved when due, or any other payment or reimbursement to the Landlord required under this Lease when due, and such failure continues for a period of 30 days after the Tenant’s receipt of written notice of such nonpayment;
(2) The Tenant becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors;
(3) The Tenant files a bankruptcy petition or Tenant is adjudged bankrupt or insolvent in proceedings filed against the Tenant;
(4) A receiver or trustee is appointed for all or substantially all of the assets of the Tenant; and
(5) The Tenant fails to comply with any term, provision, or covenant of this Lease (other than the foregoing in this section 18), and does not cure such failure within 30 days after written notice thereof to the Tenant, or such longer period as may be necessary to cure such default provided the Tenant has promptly commenced curing such default and is diligently proceeding to obtain such cure.
7. Holdover
The "Extended Stay" provision addresses circumstances when you exceed your lease term. If you fail to vacate by the conclusion of your lease term, you'll be liable to pay 125% of the standard rent for each extended stay month. It's essential to comprehend the expense of overstaying and accordingly strategize your departure plan.
If the Tenant holds over after the expiration of the Term and does not surrender the Premises prior to the expiration of the Term, then for each such month that the Tenant is holding over, the Tenant shall pay to Landlord 125% of the Rent due under this Lease for each month.
What happens when a Commercial Lease Agreement expires?
Upon the expiration of a business lease contract, various things could unfold. There are excellent resources detailing possible outcomes:
- Extend or Discontinue: Business lessees ought to choose whether to extend or end their lease agreement considerably ahead of its termination. Launching this course of action 6 to 12 months prior is deemed a worthwhile strategy.
- Shift to Month-to-Month: If the initial lease isn't extended or a new one isn't approved, the tenant might transition into a month-to-month lease, contingent upon the landlord's approval.
- Lessor Assumes Occupancy: Sometimes, when a business lease concludes, the lessor might opt to utilize the property personally for either residential or commercial use.
- Likelihood of Legal Proceedings: If any issues emerge towards the lease's termination, like if a tenant has routinely deferred rent payments or breached the lease's terms, the lease's conclusion might precipitate legal proceedings.
What are the penalties for breaking Commercial Lease Agreements?
Indeed, the repercussions for breaching a commercial lease contract can fluctuate, but generally, a few standard penalties exist:
- Outstanding Rent: Typically, one of the key penalties for breaking a commercial lease is that the tenant bears the liability for any outstanding rent, as per the lease term, even after leaving the property.
- Advance Notice: The majority of commercial landlords request an advance notice period, which can range between 30, 60, to 90 days, when the tenant chooses to break the lease.
- Termination Charges and Extra Expenses: Based on the stipulations in the lease agreement, commercial leases may impose termination charges, and also hold the tenant accountable for any marketing costs incurred while searching for a new tenant and potential cleaning expenses.
- Legal Implications: Depending on the situation and nature of the breach, if the resolution mechanisms within the lease agreement fail, the issue may escalate to legal proceedings or result in a court dispute.
Given the specific penalties can differ depending on the lease agreement, it's essential to meticulously review the lease contract to grasp the precise terms and conditions involved in premature termination.