Commercial Lease Agreement - North Dakota

COMMERCIAL LEASE AGREEMENT

North Dakota

TABLE OF CONTENTS

1. Document Header
2. Definitions

3. Operative Provisions
   3.1 Grant of Lease
   3.2 Term; Possession; Renewal Options
   3.3 Use of Premises
   3.4 Rent and Other Charges
   3.5 Security Deposit
   3.5A Condition Statement
   3.6 Taxes; Operating Expenses; Utilities
   3.7 Maintenance, Repairs, and Alterations
   3.8 Compliance With Laws; Environmental Matters

4. Representations & Warranties

5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

COMMERCIAL LEASE AGREEMENT (“Lease”) made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between [LANDLORD LEGAL NAME], a [STATE & ENTITY TYPE] (“Landlord”), and [TENANT LEGAL NAME], a [STATE & ENTITY TYPE] (“Tenant”).

Recitals

A. Landlord is the fee simple owner of certain real property located at [PROPERTY ADDRESS], together with the building(s) and improvements situated thereon (collectively, the “Property”).
B. Tenant desires to lease from Landlord, and Landlord desires to lease to Tenant, a portion of the Property more particularly described herein, subject to the terms and conditions of this Lease and in consideration of the mutual covenants herein.

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Landlord and Tenant agree as follows:

2. DEFINITIONS

The following terms have the meanings set forth below and shall apply equally to the singular and plural forms. Cross-references in parentheses indicate principal locations of use.

“Additional Rent” – All monetary obligations of Tenant other than Base Rent, including Operating Expenses, Taxes, late charges, and any other sums due under this Lease (Section 3.4).

“Base Rent” – The fixed rent payable by Tenant as set forth in the Rent Schedule, exclusive of Additional Rent (Section 3.4).

“Building” – The structure(s) situated on the Land, commonly known as [BUILDING NAME/NUMBER].

“Commencement Date” – The date on which the Lease Term commences, as determined under Section 3.2(b).

“Environmental Laws” – Applicable federal, state, and local laws concerning pollution, environmental protection, or human health.

“Event of Default” – Any of the events described in Section 6.1.

“Hazardous Materials” – Any hazardous or toxic substance, material, or waste regulated by Environmental Laws, including petroleum products and asbestos (Section 3.8).

“Land” – The parcel of real property legally described in Exhibit A.

“Lease Term” – The period commencing on the Commencement Date and expiring on the Expiration Date, subject to earlier termination as provided herein (Section 3.2).

“Operating Expenses” – The costs and expenses described in Section 3.6(b).

“Premises” – The portion of the Building containing approximately [SQUARE FEET] rentable square feet, as depicted on the floor plan attached hereto as Exhibit B.

“Rent” – Collectively, Base Rent and Additional Rent (Section 3.4).

“Taxes” – All real estate taxes, personal property taxes, assessments, and similar governmental charges allocated to the Premises (Section 3.6(a)).

Any capitalized term not defined in this Section shall have the meaning ascribed elsewhere in this Lease.

3. OPERATIVE PROVISIONS

3.1 Grant of Lease

Subject to the terms herein, Landlord hereby leases the Premises to Tenant, and Tenant hereby accepts the Premises from Landlord, to have and to hold during the Lease Term.

3.2 Term; Possession; Renewal Options

a. Lease Term. The Lease Term shall commence on the Commencement Date and end at 11:59 p.m. on [EXPIRATION DATE] (the “Expiration Date”), unless earlier terminated under this Lease.
b. Commencement Date. The “Commencement Date” shall be:
i. the later of (A) [DATE] or (B) the date Landlord delivers possession of the Premises to Tenant with Landlord’s Work (if any) Substantially Complete.

c. Delay in Delivery. If Landlord fails to deliver possession by [OUTSIDE DATE], Tenant may terminate this Lease by written notice delivered before possession is delivered. This does not limit a remedy for Landlord's own fraud, willful injury, or violation of law.
d. Renewal Option. Tenant shall have [ONE/TWO] option(s) to renew for [NUMBER] years each at [RENEWAL RENT AMOUNT OR OBJECTIVE FORMULA], exercisable by written notice to Landlord not less than [___] months before the Expiration Date.

3.3 Use of Premises

a. Permitted Use. Tenant shall use the Premises solely for [DESCRIPTION OF BUSINESS USE] and for no other purpose without Landlord’s prior written consent.
b. Compliance with Law. Tenant shall, at its sole cost, comply with all applicable federal, state, and local laws, ordinances, and regulations (collectively, “Laws”) relating to Tenant’s use or occupancy, including accessibility, zoning, and Environmental Laws.
c. Prohibited Activities. Tenant shall not use or permit the Premises to be used for any illegal purpose, nuisance, or activity that increases insurance premiums or violates recorded covenants.

3.4 Rent and Other Charges

a. Base Rent. Tenant shall pay to Landlord Base Rent in the amounts and on the dates set forth in the Rent Schedule attached hereto as Exhibit D, without offset or deduction, in advance on or before the first (1st) day of each calendar month.
b. Additional Rent. Additional Rent shall be due within ten (10) days after Landlord’s invoice. All Rent shall be paid in lawful money of the United States at [PAYMENT ADDRESS OR ACH INSTRUCTIONS] or such other place as Landlord may designate.
c. Late Charge; Interest. If Rent is not received within five (5) days after it is due, Tenant shall reimburse Landlord for reasonable, documented administrative costs caused by the late payment, capped at $[AMOUNT], plus interest at the lesser of [___]% per annum or the maximum lawful rate. No charge is intended as a penalty (N.D.C.C. § 9-08-03).

3.5 Security Deposit

Upon execution, Tenant shall deposit $[AMOUNT], not exceeding one month's rent except where N.D.C.C. § 47-16-07.1 permits otherwise, with Landlord as security for Tenant's performance. Landlord shall hold it in a federally insured, interest-bearing savings or checking account for Tenant's benefit. After the Lease ends and Tenant delivers possession, Landlord may apply the deposit and accrued interest only as permitted by § 47-16-07.1(3), and shall deliver or mail the required itemization and any balance within thirty (30) days. Interest need not be paid if occupancy lasted less than nine months.

3.5A Condition Statement

At signing, Landlord shall provide, and both parties shall agree to and sign, the condition statement in Exhibit G describing the facilities in and about the Premises (N.D.C.C. § 47-16-07.2).

3.6 Taxes; Operating Expenses; Utilities

a. Taxes. Tenant shall pay, as Additional Rent, Tenant’s Proportionate Share of Taxes. “Tenant’s Proportionate Share” is [PERCENTAGE]%, calculated by dividing the rentable square footage of the Premises by the rentable square footage of the Building.
b. Operating Expenses. Tenant shall pay Tenant’s Proportionate Share of Operating Expenses, including but not limited to insurance premiums, maintenance of common areas, and management fees (not to exceed [___]% of gross revenues).
c. Utilities. Tenant shall contract for and pay directly all utilities serving the Premises. If any utility is not separately metered, Landlord shall reasonably allocate the costs.

3.7 Maintenance, Repairs, and Alterations

a. Landlord’s Obligations. Landlord shall maintain the structural elements, roof, foundation, and building systems serving the Premises (collectively, “Landlord’s Elements”), except to the extent damage is caused by Tenant.
b. Tenant’s Obligations. Tenant shall maintain, repair, and replace (i) all non-structural portions of the Premises, (ii) interior finishes, and (iii) any Tenant-installed systems or equipment.
c. Alterations. Tenant shall not make any Alterations without Landlord’s prior written consent, which shall not be unreasonably withheld for non-structural Alterations costing less than $[THRESHOLD]. All Alterations shall comply with Law and be performed by licensed contractors. Except for Tenant’s trade fixtures, all Alterations shall become Landlord’s property upon installation.
d. Restoration. Landlord may require Tenant, at Tenant’s expense, to remove Alterations and restore the Premises to its prior condition upon Lease termination.

3.8 Compliance With Laws; Environmental Matters

a. Environmental Compliance. Tenant shall not cause or permit Hazardous Materials to be generated, used, treated, stored, or disposed of on or about the Property, except for routine quantities customarily used in Tenant’s business and in compliance with Environmental Laws.
b. Tenant Indemnity. Tenant shall indemnify, defend, and hold harmless Landlord and Landlord Parties from claims, costs, damages, and liabilities (including remediation costs and attorney fees) to the extent caused by (i) Tenant’s breach of this Section 3.8 or (ii) Hazardous Materials introduced by Tenant or Tenant Parties, except to the extent caused by a Landlord Party's own negligence, fraud, willful injury, or violation of law.
c. Landlord Representation. Landlord represents to its actual knowledge, without duty of inquiry, that it has received no written notice of any uncured violation of Environmental Laws affecting the Premises as of the Effective Date.

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Authority. Each party represents that it is duly organized, validly existing, and has full power and authority to enter into and perform this Lease.

4.2 Landlord’s Title. Landlord warrants that it holds fee simple title to the Property, free of monetary liens other than Permitted Exceptions listed on Exhibit E.

4.3 Tenant’s Solvency. Tenant represents that it is not the subject of any pending insolvency proceeding.

4.4 Survival. All representations and warranties shall survive the execution and delivery of this Lease.

5. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants of Tenant
a. Insurance. Tenant shall maintain during the Lease Term:
i. Commercial General Liability insurance with limits of not less than $[1,000,000] per occurrence and $[2,000,000] aggregate;
ii. Property/Business Interruption insurance covering Tenant’s property and improvements, written on a “special causes of loss” basis at full replacement cost; and
iii. Workers’ Compensation insurance as required by Law.
Policies shall name Landlord and any Mortgagee as additional insureds (except Workers’ Compensation) and include a waiver of subrogation in their favor.
b. Estoppel Certificates. Tenant shall deliver an estoppel certificate within ten (10) business days after request.
c. Financial Reporting. Within ninety (90) days after fiscal year-end, Tenant shall deliver its audited (or if unavailable, unaudited) financial statements.

5.2 Negative Covenants
a. Assignment & Subletting.
i. Tenant shall not assign this Lease or sublet all or any portion of the Premises without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned, or delayed; provided, Landlord may reasonably withhold consent if the proposed transferee is of a character or reputation inconsistent with a first-class commercial property.
ii. Any assignment or sublease shall be expressly subject to the provisions of this Lease and shall not release Tenant.
iii. Tenant shall reimburse Landlord for its reasonable review fees (not to exceed $[CAP]).

b. Liens. Tenant shall keep the Property free from mechanics’ liens. If any lien is filed, Tenant shall bond or discharge the lien within ten (10) days of notice.
c. Nuisance. Tenant shall not commit waste or create a nuisance on the Property.

6. DEFAULT & REMEDIES

6.1 Events of Default

Any of the following shall constitute an “Event of Default”:
a. Monetary Default. Tenant fails to pay any Rent when due and such failure continues for five (5) days after written notice.
b. Non-Monetary Default. Tenant fails to perform any non-monetary covenant and does not cure within thirty (30) days after notice (or, if the failure is not reasonably curable within thirty (30) days, fails to commence and diligently pursue cure).
c. Inability to Perform. Tenant materially fails to perform a Lease obligation and does not cure after the notice and cure period applicable to that obligation.
d. Abandonment. Tenant vacates or abandons the Premises for more than fifteen (15) consecutive days.

6.2 Landlord Remedies

Upon an Event of Default, Landlord may, at its option and in addition to any other remedy available at law or equity:
a. Terminate this Lease when permitted by law and seek possession through an eviction action under N.D.C.C. ch. 47-32, including the three-day written notice of intention to evict required by § 47-32-02 for the grounds listed there;
b. Seek unpaid Rent and proven damages, subject to applicable law and any duty to mitigate;
c. Relet the Premises after lawful recovery of possession and seek any recoverable deficiency;
d. Seek reasonable enforcement costs and attorney fees only to the extent an applicable statute or enforceable agreement permits them;
e. Seek injunctive relief when available under applicable law.

6.3 Tenant Remedies

If Landlord fails to perform any covenant and such failure materially and adversely affects Tenant’s use, Tenant may, after thirty (30) days’ notice to Landlord (except in emergencies), perform Landlord’s obligation and deduct reasonable, documented costs from the next due Rent, provided such offset does not exceed [___] months’ Base Rent in any twelve-month period.

7. RISK ALLOCATION

7.1 Indemnification
a. Tenant Indemnity. Tenant shall indemnify, defend, and hold harmless Landlord, Landlord’s affiliates, and their respective agents (“Landlord Parties”) from and against claims, losses, and liabilities to the extent caused by (i) Tenant’s use, occupancy, or maintenance of the Premises, (ii) Tenant’s breach of this Lease, or (iii) the negligence or willful misconduct of Tenant or Tenant Parties, except to the extent caused by a Landlord Party's own negligence, fraud, willful injury, or violation of law.
b. Landlord Indemnity. Landlord shall indemnify, defend, and hold harmless Tenant from and against claims arising from the gross negligence or willful misconduct of Landlord.

7.2 Limitation of Liability
Except for a party's own fraud, willful injury, or violation of law, whether willful or negligent, neither party shall be liable to the other for special or consequential damages. Subject to the same exception, Landlord’s aggregate liability shall not exceed [CAP OR “NO CAP AGREED”]. Nothing herein limits Tenant’s indemnification obligations for third-party claims to the extent enforceable under applicable law (N.D.C.C. § 9-08-02).

7.3 Insurance Proceeds & Waiver of Subrogation
All property insurance policies shall contain a waiver of subrogation in favor of the other party.

7.4 Force Majeure
Neither party shall be liable for failure to perform due to acts of God, war, terrorism, pandemic, labor strikes, governmental actions, or other events beyond its reasonable control, provided the affected party notifies the other within ten (10) days and resumes performance promptly thereafter.

8. DISPUTE RESOLUTION

8.1 Governing Law
This Lease shall be governed by and construed in accordance with the internal laws of the State of North Dakota, without regard to conflict-of-laws principles.

8.2 Forum Selection
Each party consents to jurisdiction in the North Dakota state courts for disputes arising out of this Lease. An action shall be filed in a court with jurisdiction and in a county where venue is proper under applicable law, subject to Section 8.3.

8.3 Optional Arbitration
If both parties agree in writing after a dispute arises, they may submit that dispute, other than an eviction action, to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. The arbitration shall take place in [CITY], ND before a single arbitrator experienced in commercial real estate law. Judgment upon the award may be entered in a court of competent jurisdiction.

8.4 Jury Trial
Each party retains any right to trial by jury available under applicable law.

8.5 Injunctive Relief
Notwithstanding Section 8.3, either party may seek injunctive relief when available in a court of competent jurisdiction. Possession shall be recovered through lawful process.

9. GENERAL PROVISIONS

9.1 Notices
All notices shall be in writing and deemed delivered (i) upon receipt when delivered by hand or courier, (ii) upon confirmation of transmission if sent by email with a PDF attachment and a copy by another permitted method, or (iii) three (3) business days after deposit with the United States Postal Service, certified mail, return receipt requested, postage prepaid, addressed to a party at its Notice Address set forth below (or such other address as either party may designate).

Landlord Notice Address: [ADDRESS / EMAIL]
Tenant Notice Address: [ADDRESS / EMAIL]

A statutory notice of intention to evict must be served as required by N.D.C.C. § 47-32-02; the general delivery terms above do not replace that procedure.

9.2 Amendment; Waiver
The parties intend amendments and waivers to be in writing and signed by the party against whom enforcement is sought, subject to N.D.C.C. § 9-09-06, which also permits alteration by an executed oral agreement. A waiver as to one event shall not be construed as a waiver of subsequent events.

9.3 Assignment by Landlord
Landlord may sell, assign, or otherwise transfer its interest without Tenant’s consent, provided the transferee assumes Landlord’s obligations accruing from and after the transfer date.

9.4 Successors and Assigns
This Lease shall bind and inure to the benefit of the parties and their respective successors and permitted assigns.

9.5 Severability
If a provision is held invalid, the remaining provisions shall remain effective to the extent they can operate independently. The parties may agree in writing to replace the affected provision.

9.6 Entire Agreement
This Lease, including all Exhibits, constitutes the entire agreement and supersedes prior understandings about its subject matter. Nothing in this section limits liability for a party's own fraud or violation of law.

9.7 Counterparts; Electronic Signatures
This Lease may be executed in counterparts, each of which is an original and all of which constitute one instrument. By signing electronically, each party agrees to conduct this transaction by electronic means. An electronic signature may not be denied legal effect solely because it is electronic (N.D.C.C. §§ 9-16-04(2), 9-16-06).

9.8 Recording
Tenant shall not record this Lease; however, either party may record a short-form Memorandum of Lease in substantially the form attached as Exhibit F, at Tenant’s expense.

9.9 Confidentiality
Tenant shall keep the terms of this Lease confidential, except as required by Law or to its lenders, investors, or advisors under confidentiality obligations.

10. EXECUTION BLOCK

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

LANDLORD:
[LANDLORD LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________

TENANT:
[TENANT LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________

[Optional notarial acknowledgments, if required for a recording or by a lender.]

EXHIBIT LIST

Exhibit A – Legal Description of Land
Exhibit B – Floor Plan / Premises Diagram
Exhibit C – Work Letter (if applicable)
Exhibit D – Rent Schedule
Exhibit E – Permitted Exceptions
Exhibit F – Memorandum of Lease
Exhibit G – Premises Condition Statement

EXHIBIT G – PREMISES CONDITION STATEMENT

Property and Premises: [PROPERTY ADDRESS AND SUITE]

Date of inspection: [__/__/____]

Additional observations or attached photographs: [DESCRIPTION / ATTACHMENT IDENTIFIER]

The parties agree that this statement describes the condition of the listed facilities at the time of entering the Lease.

Landlord signature: _________________________ Date: [__/__/____]

Tenant signature: ___________________________ Date: [__/__/____]