COMMERCIAL LEASE AGREEMENT

North Dakota

[// GUIDANCE: This template is drafted for commercial (non-residential) property located in the State of North Dakota (“ND”). Counsel should confirm that the negotiated business terms, property-specific issues, and any local ordinances or zoning requirements are properly incorporated before execution.]

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
   3.6 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” – All federal, state, and local statutes, regulations, ordinances, and common-law duties concerning pollution, protection of the environment or human health, including the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601–9675, as amended (“CERCLA”).

“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 be [NUMBER] ([__]) years, commencing on the Commencement Date and ending at 11:59 p.m. on the [corresponding] anniversary thereof (the “Expiration Date”).
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.
[// GUIDANCE: Include a Work Letter as Exhibit C if the Premises require build-out.]
c. Delay in Delivery. If Landlord fails to deliver possession by [OUTSIDE DATE], Tenant may, as its sole remedy, terminate this Lease by written notice delivered prior to delivery of possession.
d. Renewal Option. Tenant shall have [ONE/TWO] option(s) to renew for [NUMBER] years each at [fair market rent/mutually agreed formula], exercisable by written notice to Landlord not less than [__] months prior to 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. Any Rent not received within five (5) days after due shall accrue a late fee of [__]% of the overdue amount plus interest at the lesser of (i) [__]% per annum or (ii) the highest rate permitted by applicable Law.

3.5 Security Deposit

Upon execution, Tenant shall deposit the Security Deposit in the amount of $[AMOUNT] with Landlord as security for Tenant’s performance. Landlord may commingle the Security Deposit with other funds and shall not owe interest thereon. Landlord may apply the Security Deposit to any unpaid obligation; Tenant shall replenish within ten (10) days after written demand.

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 and against all claims, costs, damages, and liabilities (including remediation costs and attorney fees) arising out of (i) Tenant’s breach of this Section 3.8 or (ii) the presence of Hazardous Materials introduced by Tenant or Tenant Parties.
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.
[// GUIDANCE: Consider adding a Phase I environmental report as a closing deliverable.]

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]).
[// GUIDANCE: North Dakota imposes no statutory prohibition on commercially-reasonable consent standards; nonetheless, include an objective test to strengthen enforceability.]
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. Insolvency. Tenant (i) files or consents to a petition in bankruptcy, (ii) makes an assignment for the benefit of creditors, or (iii) is adjudicated insolvent.
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 by written notice and recover possession pursuant to N.D. Cent. Code ch. 47-32 (2023);
b. Accelerate all Rent due for the remainder of the Lease Term, discounted to present value at three percent (3%) per annum;
c. Re-enter and repossess the Premises, with or without summary process, subject to statutory notice requirements;
d. Relet the Premises and recover any deficiency;
e. Recover Landlord’s costs of enforcement, including reasonable attorney fees;
f. Seek injunctive relief for possession or to restrain breaches not adequately compensable in damages.

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 all claims, losses, and liabilities arising from (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.
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
Neither party shall be liable to the other for special, consequential, or punitive damages. Landlord’s aggregate liability shall not exceed [CAP OR “NO CAP AGREED”]. Nothing herein limits Tenant’s indemnification obligations for third-party claims.

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
The state courts located in [COUNTY], North Dakota shall have exclusive jurisdiction over any action arising out of this Lease, except as provided in Section 8.3.

8.3 Optional Arbitration
Either party may elect, by written notice delivered within thirty (30) days after service of a complaint, to submit any dispute (other than eviction or injunctive proceedings) 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 any court of competent jurisdiction.

8.4 Jury Trial Waiver
TO THE EXTENT PERMITTED BY LAW, EACH PARTY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS LEASE.

8.5 Injunctive Relief
Notwithstanding Section 8.3, either party may seek temporary or permanent injunctive relief, including eviction, in a court of competent jurisdiction without posting bond (to the extent permitted by Law).

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]

9.2 Amendment; Waiver
No amendment or waiver shall be effective unless in writing signed by the party against whom enforcement is sought. 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 any provision is held invalid, the remaining provisions shall remain in full force, and the invalid provision shall be modified to reflect the original intent to the greatest extent permissible.

9.6 Entire Agreement
This Lease, including all Exhibits, constitutes the entire agreement and supersedes all prior understandings. No reliance is placed on any representation not contained herein.

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. Signatures transmitted by PDF or other electronic means shall be deemed originals.

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: _________

[Corporate Acknowledgments/Notarial Certificates, if required under N.D. Cent. Code §§ 44-06-01 et seq., to follow.]

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

[// GUIDANCE: Attach additional exhibits as needed, such as a guaranty, rules and regulations, or building operating standards.]

[// GUIDANCE: Ensure compliance with any local fire inspection certificates, business licensing requirements, and ND corporate resolutions for entity signature authority prior to closing.]