COMMERCIAL LEASE AGREEMENT

(Minnesota)

[// GUIDANCE: This template is designed for use in leasing commercial real property located in Minnesota. It is drafted to comply with Minn. Stat. ch. 504B (Landlord-Tenant) and standard commercial‐leasing practice. Bracketed text requires user input. Optional or negotiable provisions are noted as such. Remove all guidance comments before final execution.]

TABLE OF CONTENTS

1. Definitions
2. Lease of Premises; Term
3. Rent and Other Charges
4. Use; Compliance With Laws
5. Maintenance and Repairs
6. Alterations
7. Assignment and Subletting
8. Insurance; Indemnity; Limitation of Liability
9. Environmental Matters
10. Default; Remedies
11. Damage or Destruction
12. Condemnation
13. Dispute Resolution
14. General Provisions
15. Execution

(Exhibits A–D, as applicable)

1. DEFINITIONS

For ease of reference, the following terms have the meanings set forth below. Any term not defined in this Article 1 but defined elsewhere in this Lease shall have the meaning given at its first use.

“Additional Rent” – All amounts (other than Base Rent) payable by Tenant pursuant to this Lease, including without limitation Operating Expenses, Taxes, utilities, and late fees.
“Affiliate” – Any entity that Controls, is Controlled by, or is under common Control with a party.
“Base Rent” – The fixed rental amounts set forth in Section 3.1.
“Building” – The structure located at the Property that contains the Premises.
“Business Day” – Any day other than Saturday, Sunday, or a federal or Minnesota state holiday.
“Commencement Date” – [COMMENCEMENT DATE].
“Control” – Possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity.
“Event of Default” – Any event described in Section 10.1.
“Expiration Date” – The last day of the Term, as adjusted pursuant hereto.
“Hazardous Materials” – Any substance, material, or waste that is regulated under Environmental Laws.
“Landlord” – [FULL LEGAL NAME], a [STATE] [ENTITY TYPE], and its successors and assigns.
“Landlord Parties” – Landlord, its Affiliates, and the respective partners, shareholders, members, managers, officers, directors, employees, and agents of each.
“Lease” – This Commercial Lease Agreement, together with all Exhibits.
“Operating Expenses” – All costs of owning, operating, managing, maintaining, repairing, and insuring the Property and Building, as more particularly described in Section 3.3.
“Premises” – The space shown on Exhibit A containing approximately [___] rentable square feet located at [STREET ADDRESS], within the Building.
“Property” – The parcel of real property legally described on Exhibit A and all improvements thereon.
“Rent” – Collectively, Base Rent and Additional Rent.
“Tenant” – [FULL LEGAL NAME], a [STATE] [ENTITY TYPE], and its permitted successors and assigns.
“Tenant Parties” – Tenant, its Affiliates, subtenants, concessionaires, licensees, contractors, and the respective partners, shareholders, members, managers, officers, directors, employees, agents, invitees, and customers of each.
“Term” – The term of this Lease as set forth in Article 2.

2. LEASE OF PREMISES; TERM

2.1 Lease Grant. Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, upon the terms and conditions set forth herein.

2.2 Term. The Term shall commence on the Commencement Date and continue for [NUMBER] (__) years, expiring on the Expiration Date, unless sooner terminated in accordance with this Lease.

2.3 Possession & Delivery. Landlord shall deliver possession of the Premises to Tenant in broom-clean condition on the Commencement Date, free of any prior occupants, and with Landlord’s Work (if any) substantially complete.

2.4 Renewal Option. [OPTIONAL] Tenant shall have [ONE/TWO] option(s) to renew the Term for [TERM] each upon at least [____] days’ prior written notice and otherwise on the terms set forth in Exhibit C.

3. RENT AND OTHER CHARGES

3.1 Base Rent. Tenant shall pay Base Rent in the following amounts, without set-off or deduction, in advance on the first day of each calendar month:

Year 1: $[_] per month ($[_]/SF)
Year 2: $[____] per month
[Add schedule through Term]

3.2 Payment Mechanics. All Rent shall be paid in lawful money of the United States by ACH transfer to an account designated by Landlord (or such other manner specified by Landlord) and shall be deemed paid when actually received by Landlord.

3.3 Operating Expenses. Tenant shall pay Tenant’s Proportionate Share ([__] %) of all Operating Expenses within 30 days after billing. Operating Expenses include, without limitation: insurance, utilities for Common Areas, maintenance, repair, property management fees (not exceeding 4% of gross revenues), snow and ice removal, security, and reserves.

3.4 Taxes. Tenant shall pay Tenant’s Proportionate Share of all real estate taxes, special assessments, and governmental charges (“Taxes”) assessed against the Property.

3.5 Late Charges; Interest. If any Rent is not paid within five (5) Business Days after due, Tenant shall pay a late charge equal to 5% of the overdue amount plus interest at the lesser of 12% per annum or the maximum rate permitted by Minn. Stat. § 334.01.

3.6 Security Deposit. Upon execution, Tenant shall deliver a security deposit in the amount of $[______] (“Security Deposit”), to be held and applied as provided by Minn. Stat. § 504B.178.

4. USE; COMPLIANCE WITH LAWS

4.1 Permitted Use. Tenant shall use the Premises solely for [SPECIFIC PERMITTED USE] and for no other purpose without Landlord’s prior written consent.

4.2 Legal Compliance. Tenant, at its sole cost, shall comply with all present and future federal, state, and local statutes, ordinances, rules, and regulations (collectively, “Laws”) applicable to the Premises or Tenant’s use thereof, including without limitation Minn. Stat. ch. 504B and all Environmental Laws.

4.3 Signage. All signage is subject to Landlord’s prior written approval (not to be unreasonably withheld) and compliance with applicable zoning and municipal ordinances.

4.4 Conduct. Tenant shall not create any nuisance, interfere with other occupants, or permit any use that would increase insurance premiums or void insurance.

5. MAINTENANCE AND REPAIRS

5.1 Landlord Obligations. Landlord shall maintain and repair structural elements of the Building, the roof, foundation, and Common Areas, and shall keep building systems (HVAC, electrical, plumbing) in good working order, except to the extent damage is caused by Tenant Parties.

5.2 Tenant Obligations. Tenant shall maintain the Premises, including interior surfaces, ceilings, floor coverings, doors, windows, non-structural plumbing, and all Tenant improvements, in good order and repair, ordinary wear and tear excepted.

5.3 Right of Entry. Landlord may enter the Premises upon reasonable notice (except in emergencies) to inspect, perform maintenance, or show to prospective tenants or purchasers.

6. ALTERATIONS

6.1 Consent Required. Tenant shall not make any alterations, additions, or improvements (“Alterations”) without Landlord’s prior written consent; cosmetic, non-structural Alterations costing less than $[_____] in the aggregate during any 12-month period shall not require consent but shall require prior notice.

6.2 Construction Standards. All Alterations shall be performed in a first-class manner, in compliance with Laws, using licensed contractors, and free of liens.

6.3 Ownership; Removal. Unless Landlord elects otherwise at the time consent is granted, all Alterations shall become Landlord’s property at expiration; however, Landlord may require Tenant to remove Alterations and restore the Premises to its original condition, reasonable wear and tear excepted.

7. ASSIGNMENT AND SUBLETTING

7.1 Restriction. Tenant shall not assign this Lease or sublet any portion of the Premises (each a “Transfer”) without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned, or delayed, subject to Section 7.2.

[// GUIDANCE: Minnesota law permits reasonable lease provisions restricting assignment/subletting in commercial leases. See EOP–BP No. 1, LLC v. Brookfield Fin. Prop. (D. Minn. 2017).]

7.2 Permitted Transfers. Notwithstanding Section 7.1, Tenant may Transfer, without Landlord’s consent but upon prior notice, to:
(a) an Affiliate;
(b) any successor by merger, consolidation, or sale of substantially all of Tenant’s assets, provided Tenant’s net worth is not thereby reduced.

7.3 Transfer Premium. If consideration paid by Transferee exceeds Rent (on a rentable square foot basis), Tenant shall pay Landlord 50% of the net excess.

7.4 Continuing Liability. No Transfer shall release Tenant from primary liability unless expressly agreed by Landlord in writing.

8. INSURANCE; INDEMNITY; LIMITATION OF LIABILITY

8.1 Tenant Insurance. Throughout the Term, Tenant shall maintain:
a. Commercial General Liability: $[1,000,000] per occurrence / $[2,000,000] aggregate;
b. Property/Builder’s Risk: Full replacement cost of Tenant’s property and Alterations;
c. Workers’ Compensation: Statutory limits;
d. Business Auto (if vehicles used): $[1,000,000] combined single limit.
Policies shall (i) name Landlord as additional insured (except workers’ compensation), (ii) be issued by carriers rated A-VII or better by A.M. Best, (iii) include waiver of subrogation in favor of Landlord Parties.

8.2 Landlord Insurance. Landlord shall maintain “all-risk” property insurance on the Building (excluding Tenant’s property) at at least 90% replacement cost, and commercial general liability of not less than $[2,000,000] per occurrence.

8.3 Mutual Waiver of Subrogation. Each party releases the other (and waives all rights of recovery) for insured claims, and shall cause its insurers to acknowledge such waiver.

8.4 Indemnity. Tenant shall indemnify, defend, and hold harmless Landlord Parties from and against all claims, damages, liabilities, and expenses (including reasonable attorneys’ fees) arising out of (i) the use, occupancy, or operation of the Premises by Tenant Parties, (ii) any breach of this Lease by Tenant, or (iii) the negligence or willful misconduct of Tenant Parties. The foregoing obligation survives expiration or termination.

8.5 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES. Aggregate liability of Landlord to Tenant for damages arising under this Lease shall not exceed $[NEGOTIABLE CAP AMOUNT], except with respect to (i) matters for which insurance is required hereunder, (ii) Landlord’s gross negligence or willful misconduct, or (iii) claims for personal injury or property damage caused by Landlord.

9. ENVIRONMENTAL MATTERS

9.1 Compliance. Tenant shall, at its expense, comply with all Environmental Laws and shall not cause or permit Hazardous Materials to be generated, used, stored, treated, or disposed of in, on, or about the Property, except for customary office and cleaning supplies in reasonable quantities and in compliance with Laws.

9.2 Tenant Remediation. Tenant shall promptly, at its expense, remediate any environmental contamination caused by Tenant Parties to the extent required by Environmental Laws, using a consultant reasonably acceptable to Landlord.

9.3 Environmental Indemnity. Tenant shall indemnify Landlord Parties from any claims, fines, penalties, costs, or liabilities (including remediation costs and attorneys’ fees) arising from Tenant Parties’ violation of Environmental Laws or release of Hazardous Materials.

9.4 Landlord Disclosure. To Landlord’s knowledge, Landlord has not received written notice of any existing Release (as defined by CERCLA) in, on, or under the Property in violation of Environmental Laws. Landlord makes no other representations or warranties regarding environmental conditions.

[// GUIDANCE: Minnesota Pollution Control Agency (MPCA) rules may impose specific obligations for certain industrial uses; ensure client compliance.]

10. DEFAULT; REMEDIES

10.1 Events of Default. Each of the following constitutes an Event of Default:
a. Failure to pay any Rent within five (5) days after written notice that such payment is overdue (notice only required twice in any 12-month period);
b. Material breach of any non-monetary obligation, if not cured within 30 days after notice (or such longer period as is reasonably required, provided Tenant commences cure within such 30 days and diligently pursues same);
c. Abandonment or vacation of the Premises for more than 15 consecutive days;
d. Attempted Transfer in violation of Article 7;
e. Insolvency, assignment for the benefit of creditors, appointment of receiver, or commencement of bankruptcy proceedings not dismissed within 60 days.

10.2 Landlord Remedies. Upon an Event of Default, Landlord may, subject to Minn. Stat. § 504B.291 et seq.:
a. Terminate Tenant’s right of possession (and/or this Lease) by written notice;
b. Re-enter the Premises and remove Tenant in accordance with Minnesota commercial eviction procedures (unlawful detainer), without waiver of claims for damages;
c. Accelerate all Rent due for the balance of the Term, discounted to present value at 4% per annum;
d. Re-let the Premises and apply rents first to re-letting costs, then to Tenant’s obligations;
e. Recover all damages permitted by Law, including attorneys’ fees and costs.
ALL REMEDIES ARE CUMULATIVE AND MAY BE EXERCISED CONCURRENTLY OR SEPARATELY.

10.3 Eviction Remedy. Nothing herein shall limit Landlord’s right to seek injunctive relief (including writ of restitution or eviction) to regain possession as provided under Minn. Stat. § 504B.285.

10.4 Landlord Default. Landlord shall be in default if Landlord fails to perform any material obligation within 30 days after receipt of Tenant’s written notice (extended as necessary if performance cannot reasonably be completed within 30 days and Landlord diligently pursues cure). Tenant’s sole remedies shall be (i) specific performance, (ii) actual damages, and (iii) abatement of Rent proportionate to any portion of the Premises rendered unusable due to Landlord’s default.

11. DAMAGE OR DESTRUCTION

11.1 Restoration. If the Premises are damaged by fire or other casualty, Landlord shall restore the Premises with reasonable diligence; Rent shall abate proportionately from the date of casualty until restoration is substantially complete.

11.2 Termination Rights. Landlord may terminate this Lease if restoration is reasonably estimated to exceed 240 days. Tenant may terminate if restoration is not substantially complete within 270 days after the casualty; notice must be given within 15 days after the 270-day period.

12. CONDEMNATION

12.1 Substantial Taking. If more than 25% of the rentable area of the Premises or Property is taken by eminent domain, either party may terminate this Lease as of the date of taking.

12.2 Awards. Landlord reserves all rights to condemnation awards; Tenant may pursue a separate claim for relocation costs or loss of Tenant’s personal property, provided such claim does not diminish Landlord’s award.

13. DISPUTE RESOLUTION

13.1 Governing Law. This Lease and any disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to its conflicts-of-law principles.

13.2 Forum Selection. Each party irrevocably submits to the exclusive jurisdiction of the state courts located in [COUNTY], Minnesota for any action arising out of or relating to this Lease.

13.3 Optional Arbitration. [OPTIONAL] Upon mutual written agreement made after a dispute arises, the parties may submit the dispute to binding arbitration in accordance with the Commercial Rules of the American Arbitration Association then in effect. Judgment on any award may be entered in any court having jurisdiction.

13.4 Jury Trial Waiver. [OPTIONAL] EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY.

13.5 Equitable Remedies. Notwithstanding anything to the contrary, Landlord may seek temporary, preliminary, and permanent injunctive relief (including eviction) without the necessity of posting bond.

14. GENERAL PROVISIONS

14.1 Amendment; Waiver. This Lease may be amended only by a writing signed by both parties. No waiver shall be effective unless in writing and signed by the party waiving. A waiver on one occasion shall not constitute a waiver on subsequent occasions.

14.2 Notices. All notices shall be in writing and deemed given (i) upon personal delivery, (ii) one Business Day after deposit with a national overnight courier, or (iii) three Business Days after deposit in U.S. certified mail, return-receipt requested, postage prepaid, to the addresses below (or as either party may designate by notice):

Landlord: [ADDRESS]
Tenant: [ADDRESS]
With copy to: [COUNSEL ADDRESS]

14.3 Successors and Assigns. Subject to Article 7, this Lease is binding upon and inures to the benefit of the parties and their respective successors and assigns.

14.4 Severability. If any provision is unenforceable, it shall be modified to the minimum extent necessary to make it enforceable, and the remainder shall remain in full force and effect.

14.5 Entire Agreement. This Lease (including Exhibits) constitutes the entire agreement between the parties regarding the subject matter and supersedes all prior agreements.

14.6 Counterparts; Electronic Signatures. This Lease may be executed in counterparts, each of which is deemed an original. Signatures transmitted electronically or by .pdf shall be deemed original for all purposes.

14.7 Quiet Enjoyment. So long as Tenant is not in default, Tenant shall peacefully and quietly enjoy the Premises, subject to the terms of this Lease.

14.8 Holding Over. If Tenant holds over without Landlord’s consent, tenancy shall be from month to month at 150% of the then current Rent and subject to all other terms herein, but nothing herein shall be construed as consent to such holding over.

14.9 Force Majeure. Neither party shall be liable for failure to perform (except monetary obligations) due to events beyond its reasonable control, including acts of God, war, terrorism, pandemics, or governmental orders, provided the affected party gives prompt notice and resumes performance as soon as practicable.

15. EXECUTION

IN WITNESS WHEREOF, the parties have executed this Lease as of the Effective Date.

LANDLORD:
[FULL LEGAL NAME]
By: ____
Name: ____
Title: ____
Date: ______

TENANT:
[FULL LEGAL NAME]
By: ____
Name: ____
Title: ____
Date: ______

[Notary acknowledgment blocks may be inserted here if required for recordability.]

EXHIBITS (attach as applicable)

Exhibit A – Floor Plan and Legal Description of Property
Exhibit B – Building Rules and Regulations
Exhibit C – Renewal Option / Landlord’s Work
Exhibit D – Form of Guaranty

[// GUIDANCE: If the Lease (or a memorandum thereof) will be recorded, add statutory short-form lease language and notarization per Minn. Stat. § 507.24. Verify any county-specific recording requirements.]

[// GUIDANCE: END OF DOCUMENT]