New Hampshire Commercial Lease Agreement

Introduction

A New Hampshire commercial lease agreement is a legally binding contract between a business tenant and a landlord of commercial property, such as office, retail, or industrial space. The agreement outlines important terms of the arrangement, including lease duration, rent amount, security deposit, subleasing rights, exclusivity provisions, renewal options, and more. Unlike residential leases, commercial leases in New Hampshire are primarily governed by contract law rather than protective statutes, giving both parties greater flexibility in negotiating terms.

This comprehensive guide covers the essential elements of a New Hampshire commercial lease, applicable state laws, required disclosures, and best practices for both landlords and tenants.

Legal Framework

Commercial leases in New Hampshire operate under a different legal framework than residential leases. Key distinctions include:

Contract-Based Terms: Unlike residential tenancies governed by NH RSA 540-A, commercial leases are primarily contract-based. The parties have significant freedom to negotiate terms including security deposits, late fees, and landlord access rights.

Security Deposit Exemption: Commercial tenants are explicitly excluded from the residential security deposit protections under NH RSA 540-A:5-8. Security deposit amounts, handling, and return procedures are governed entirely by the lease agreement. ^[1]

Eviction Procedures: Commercial evictions follow NH RSA 540 procedures, with different notice requirements than residential tenancies. ^[2]

Required Disclosures

Brokerage Relationship Disclosure

When a licensed real estate agent or broker is involved in a commercial lease transaction, New Hampshire law requires disclosure of the brokerage relationship. Under NH Admin Rules Rea 701.01(a), a licensee must provide a written brokerage relationship disclosure to the consumer at the time of the first business meeting. ^[3]

The disclosure form must be the official "Brokerage Relationship Disclosure Form" adopted by the New Hampshire Real Estate Commission. This form is available from the New Hampshire Office of Professional Licensure and Certification. ^[4]

Types of Commercial Leases

Commercial leases are typically categorized by how operating expenses are allocated between the landlord and tenant. The three primary structures are:

Gross Lease (full-Service Lease)

In a gross lease, the landlord pays for all operating expenses, including property taxes, insurance, utilities, and maintenance. The tenant pays a single, all-inclusive rent amount. This structure provides predictable monthly costs for tenants but typically results in higher base rent. The landlord maintains responsibility for:

General exterior structure and building systems (heating, plumbing, electrical)

Parking area maintenance, including snow removal

Property taxes and insurance

Common area maintenance and landscaping

Triple Net Lease (Nnn)

In a triple net lease, the tenant pays the base rent plus all three major operating expenses: property taxes, insurance, and common area maintenance (CAM). This structure shifts most financial risk to the tenant but typically results in lower base rent. The three "N's" represent:

Net Taxes: Property taxes assessed against the premises

Net Insurance: Property and liability insurance premiums

Net CAM: Common area maintenance including landscaping, parking lot maintenance, HVAC maintenance, and other shared expenses

Modified Gross Lease

A modified gross lease represents a middle ground where landlord and tenant negotiate which expenses each party will cover. Common arrangements include the tenant paying utilities while the landlord covers property taxes and insurance, or the tenant paying a base year amount for operating expenses with any increases passed through annually. This flexible structure allows parties to allocate risk based on their specific circumstances.

Essential Lease Provisions

Identification of Parties

The lease must clearly identify all parties to the agreement, including full legal names and addresses. For business entities, include the entity type (LLC, Corporation, etc.) and state of formation. Both the landlord and tenant should be identified with their complete legal names and mailing addresses.

Description of Premises

A precise description of the leased premises is essential. Include:

Street address with suite or unit number

Total rentable square footage

Type of space (retail, office, industrial, warehouse, etc.)

Common areas included in the lease

Parking allocation

Permitted Use

The lease should specify the permitted use of the premises. Options include allowing all purposes legal under law or restricting use to specific business activities. Any change in the permitted use typically requires the landlord's prior written consent. Tenants should verify that their intended use complies with local zoning ordinances and any building or complex restrictions.

Lease Term

The lease term specifies the duration of the tenancy, including the commencement date and expiration date. Commercial leases typically range from one to ten years or longer. Important considerations include:

Recording Requirement: Under NH RSA 477:7, leases exceeding seven years must be recorded at the county registry of deeds to be valid against third parties. Alternatively, a "Notice of Lease" may be filed per RSA 477:7-a. ^[5]

Renewal Options: The lease should specify any options to renew, including notice requirements and rent adjustment mechanisms for renewal terms.

Security Deposit

Unlike residential leases, commercial lease security deposits in New Hampshire are not subject to statutory limitations. ^[1] The deposit amount, handling requirements, and return procedures are entirely governed by the lease agreement. Common provisions include:

Deposit amount (often 1-3 months' rent)

Whether the deposit must be held in a separate account

Interest accrual requirements (if any)

Conditions for deductions

Timeline for return after lease termination

Rent

The rent section should clearly specify:

Base Rent: The monthly rental amount, due date, and payment method.

Percentage Rent: Some retail leases include percentage rent based on gross or net sales, paid monthly, quarterly, or annually.

Rent Escalation: Provisions for annual rent increases, whether fixed percentage, CPI-based, or market rate adjustments.

Late Fees

New Hampshire does not impose statutory limits on commercial lease late fees. Late fee provisions are governed entirely by the lease agreement. Common structures include:

Flat fee: A fixed dollar amount per late payment

Percentage: A percentage of the overdue rent (typically 5-10%)

Interest-based: Interest accruing at a specified annual rate

While there is no statutory cap, late fees should be reasonable to be enforceable. Courts may decline to enforce fees deemed excessive or punitive.

Eviction Procedures

Commercial evictions in New Hampshire follow the procedures outlined in NH RSA 540. Key requirements include: ^[2]

Notice Requirements

Nonpayment of Rent: Seven (7) days' notice is sufficient when a nonresidential tenant neglects or refuses to pay rent due and in arrears upon demand. ^[6]

Other Terminations: If rent is payable more frequently than once every three months, notice equal to the rent payment period is required. In all other cases, three months' notice is sufficient.

Service of Notice

For commercial properties, the demand for rent or eviction notice may be served: ^[7]

Personally upon the tenant

Left at the tenant's last and usual place of abode

At the commercial property, with a copy sent by certified mail to the tenant's last known legal address

For non-resident tenants, by certified mail to the tenant's registered agent

Additional Important Provisions

Assignment and Subletting

New Hampshire does not have specific statutes governing commercial lease assignments or subletting. These terms are governed by the lease agreement. Standard provisions require the landlord's prior written consent for any assignment or sublease, with such consent not to be unreasonably withheld or delayed. Common exceptions allowing assignment without consent include transfers to:

A corporation with which the tenant merges or consolidates

Any subsidiary of the tenant

Any corporation under common control with the tenant

A purchaser of substantially all of the tenant's assets

Insurance Requirements

Commercial leases typically require tenants to maintain comprehensive insurance coverage. Standard requirements include:

Commercial General Liability: Minimum of $1,000,000 per occurrence is standard industry practice, with the landlord named as an additional insured.

Property Insurance: Coverage for tenant's personal property, fixtures, and improvements.

Business Interruption Insurance: Coverage for lost income during property restoration.

Ada Compliance

The Americans with Disabilities Act (ADA) imposes accessibility requirements on commercial properties open to the public. ^[8] Both landlords and tenants share compliance obligations:

Landlord Responsibility: Common areas including entrances, hallways, parking lots, and shared restrooms.

Tenant Responsibility: Interior of the leased space, including layout modifications and accessible fixtures.

The lease should clearly allocate ADA compliance responsibilities and costs between the parties. Non-compliance can result in fines up to $75,000 for a first violation and $150,000 for subsequent violations.

Holdover Tenancy

New Hampshire does not have a specific statute governing commercial holdover rent rates. Parties should negotiate holdover provisions in the lease. Standard provisions include:

Increased rent during holdover period (typically 150-200% of base rent)

Month-to-month tenancy status during holdover

Landlord's right to pursue eviction and damages

Landlord Access

Unlike residential tenancies with statutory notice requirements, commercial lease landlord access rights are governed entirely by the lease agreement. Standard provisions allow landlord entry for:

Inspections with reasonable advance notice (typically 24-48 hours)

Emergency repairs without notice

Showing to prospective tenants during final months of lease term