New Mexico Commercial Lease Agreement Template
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A New Mexico Commercial Lease Agreement is essentially a reciprocal contract between you and your property owner. This covenant permits you the right to utilize a property for your business proceedings, for a settled duration and cost. It's customized to the specific activities your enterprise aspires to execute there. Ensure you comprehend every facet of it prior to affixing your signature.
What are the related laws for Commercial Lease Agreements in New Mexico?
Chapter 55, Article 2A of the Uniform Commercial Code specifically tackles leases. This encompasses various processes, definitions, and terms that supervise the establishment, modification, fulfillment, and violation of lease contracts.
Manifested in some segments of the article:
- Section 55-2A-103 delineates definitions, cataloging diverse expressions pertinent to lease contracts along with their specific definitions.
- Section 55-2A-219 manages scenarios dealing with risk of loss, detailing the conditions and instances where the risk of loss from commodities transpires.
- Section 55-2A-506 fixes the limitation statute in settling lease contract dilemmas. It indicates that parties can cut short the limitation period down to a minimum of one year.
Laws — Chapter 55, Article 2A: New Mexico Uniform Commercial Code
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Read on to learn more about New Mexico Commercial Lease Agreement, including:
How to write a Commercial Lease Agreement
As an entrepreneur, you may find the intricate legal language overwhelming. Yet, armed with a clear plan and proper direction, you can skillfully craft your lease contract. Let's delve into the key components of a commercial lease agreement and customize it to suit your requirements - think of this as your amiable, uncomplicated coach for mastering the realm of commercial leases.
1. Permitted Uses
The "Authorized Activities" provision instructs you on the utilization of the rented premises. It distinctively specifies the permitted operations. These encompass industrial operations, administrative tasks, warehousing, dispersal, and the production and dissemination of goods.
It's paramount to precisely enumerate all your anticipated business undertakings here. This explicitness assists in evading potential legal complications and guarantees effective assignment of resources. Enter every particular to preclude unexpected occurrences in the future. This comprehension ensures your business's smooth operation.
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 lease duration and renewals. It initiates on the Commencement Date and concludes on the Termination Date. You have the option to expand it for an additional two periods of two years under identical terms, though the lease payment may be subject to change. Ensure you alert the lessor in written form 30 days prior to the lease's conclusion to enact extension.
(b) "Duration" is synonymous with both your initial leasing period and any subsequent renewals.
Explicit lease durations are vital for enterprise planning and daily activities, including potential 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 Repairs" stipulation elucidates who is responsible for repair tasks. It encompasses both internal and external complications, such as malfunctioning plumbing or impaired masonry. The financial burden resides with the lessor, not the lessee.
If a repair isn't undertaken swiftly, you hold the right to arrange repair services and deduct the costs from your lease payment. Documentation of these incidents is essential for potential reference. This provision is critical, as it demarcates repair duties and provides protection against unforeseen expenditures.
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 privileges to adapt the rented space. Adjustments can be carried out without lessor approval, but substantial modifications become the possession of the lessor. Personal property such as shelving or equipment can be extracted without hesitation unless it inflicts harm on the property. Comprehending this provision can avert conflicts and facilitate efficient planning for your business arrangement.
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 ensures protection for both lessee and lessor. As the lessee, it is necessary to obtain property and liability insurance, designating the lessor as an additional insured. The landlord is responsible for insurance covering damages to the premises.
'Waivers of subrogation' prevent insurance providers from seeking compensation from the opposing party following a loss. Your insurance carrier must inform the lessor 30 days before policy termination. Familiarizing yourself with these conditions fortifies your business's financial stability.
(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 "Default Instances" provision enumerates actions deemed to violate your tenancy agreement. Common instances encompass overdue lease payments, encountering bankruptcy, or neglecting to adhere to lease conditions. Stay mindful of this segment to evade these shortcomings and uphold a harmonious rapport with your lessor while efficiently operating your enterprise.
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 "Holdover" provision encompasses circumstances where you remain beyond your tenancy period. If you fail to vacate by the conclusion of your lease term, you will be responsible for 125% of the standard rent for each additional month of occupancy. Be aware of the financial implications of overstaying and devise an appropriate 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 commercial lease agreement, various outcomes could unfold. Here are some excellent sources detailing possible scenarios:
- Renew or End: Entrepreneurs should choose whether to renew or conclude their lease deal well in advance of its termination. Kickstarting this procedure 6 to 12 months ahead is generally seen as a sound strategy.
- Transition to Rolling Basis: If the prime lease is not extended or a fresh lease is not drawn up, the lessee could potentially shift to a rolling tenancy, assuming the lessor consents.
- Lessor Assumes Occupancy: Occasionally, upon the cessation of a commercial lease, the lessor might decide to inhabit the property themselves, either for domestic or commerce use.
- Possibility of Legal Proceedings: If troubles arise around the lease expiry, for instance, if a lessee has persistently defaulted on rent payments or violated lease conditions, the lease conclusion might escalate to legal proceedings.
What are the penalties for breaking Commercial Lease Agreements?
Certainly, consequences for terminating a commercial lease agreement can vary, but there are usually a few recurrent penalties:
- Outstanding Rent: Frequently, one of the principal consequences for ending a commercial lease prematurely is that the lessee remains responsible for the remaining rent owed for the term of the lease, even after leaving the premises.
- Period of Notice: Many commercial lessors require a notification period between 30, 60, to 90 days when the lessee opts to terminate the lease.
- Breach Fees and Additional Expenses: Based on what is elaborated in the lease agreement, commercial leases may impose breach fees, and also hold the lessee accountable for any promotional costs incurred in seeking a new lessee and potential sanitation expenses.
- Legal Ramifications: Depending on the situation and the essence of the violation, if all available resolution mechanisms within the lease are depleted, the matter may heighten to legal steps or end in a court dispute.
Since the specifics of consequences can differ based on the lease contract, it's of essence to meticulously go through the lease document to understand the precise terms and stipulations involved in early cessation.