Commercial Leases in New Jersey FAQs

Commercial or business leases in New Jersey refer to commercial lease agreements entered between a landlord (property owner) and a tenant (business owner) for the rental of commercial property, such as office spaces, retail stores, warehouses, or industrial facilities. These leases allow businesses to operate within a specific space for a predetermined period and under specified terms and conditions. This page is going to answer some of the common questions regarding business leases in New Jersey.

Gross Lease (Full-Service Lease): In a gross lease, the tenant pays a fixed rent amount, and the landlord covers most of the property expenses, such as property taxes, insurance, maintenance, and utilities. This type of lease provides more predictable costs for the tenant.

Net Lease: In a net lease, the tenant pays a base rent and some or all of the property expenses, such as property taxes, insurance, and maintenance. There are several variations of net leases, including single net (N), double net (NN), and triple net (NNN) leases, with each type requiring the tenant to cover a greater share of property expenses.

Modified Gross Lease: In a modified gross lease, the tenant and landlord negotiate which property expenses each party will cover. This type of lease allows for greater flexibility in allocating responsibilities between the parties.

Percentage Lease: In a percentage lease, the tenant pays a base rent and a percentage of their gross revenue or sales as additional rent. This type of lease is common in retail businesses, such as shopping centers and malls.

Negotiating a commercial lease in New Jersey involves a thorough understanding of the lease terms and conditions, clear communication between the landlord and tenant, and flexibility to reach a mutually beneficial agreement. When negotiating a commercial lease in NJ, it is recommended to follow these general steps: research the market, identify your business needs, hire a professional, analyze the lease terms, prepare a negotiation strategy, communicate your needs, document the agreed terms, and carefully review the lease with a trusted attorney and sign.

Hiring a commercial real estate agent or broker can provide significant benefits to businesses looking for commercial property or negotiating lease terms. They can assist you in many ways such as their specialized knowledge, access to properties, save you time, negotiation skills, network and connections, legal and regulatory knowledge, tenant representation, and more.

Reviewing commercial lease terms carefully with an attorney in New Jersey is crucial for protecting your business interests, ensuring compliance with laws and regulations, and minimizing potential risks and liabilities. Investing in legal counsel during the lease negotiation process can provide valuable peace of mind and contribute to the long-term success of your business.

New Jersey has certain state-specific regulations and laws that can impact commercial leases. It is essential to consult with an experienced New Jersey attorney familiar with commercial leases to ensure that your lease complies with all applicable state and local laws and regulations. While this is not an exhaustive list, some key aspects you should be aware of include:

Security Deposits: In New Jersey, there is no specific cap on security deposits for commercial leases. However, the New Jersey Security Deposit Act requires that any security deposit in excess of one month’s rent must be deposited in an interest-bearing account. The interest earned on the deposit belongs to the tenant, except for a 1% annual administrative fee that can be retained by the landlord.

Consumer Fraud Act: While the New Jersey Consumer Fraud Act primarily targets consumer transactions, certain aspects of the act may apply to commercial leases. For example, if a landlord engages in deceptive or fraudulent practices, they may be held liable under the act.

Zoning and Land Use Regulations: Commercial leases in New Jersey must comply with local zoning and land use regulations, which vary by municipality. These regulations dictate how a property can be used and may impose limitations on building size, parking, signage, and other aspects of the property.

Environmental Laws: New Jersey has strict environmental laws, including the Industrial Site Recovery Act (ISRA) and the Site Remediation Reform Act (SRRA). These laws regulate the cleanup of contaminated industrial and commercial sites and can impact commercial leases, particularly for properties with a history of environmental issues.

Americans with Disabilities Act (ADA): While the ADA is a federal law, it applies to commercial properties in New Jersey. Landlords and tenants must ensure that their properties are accessible to individuals with disabilities and comply with ADA requirements.

Construction Liens: New Jersey has specific regulations governing construction liens, which can impact commercial leases if improvements or renovations are made to the property. The New Jersey Construction Lien Law establishes the process for filing and enforcing construction liens, which can secure payment for contractors and subcontractors involved in the project.

Rent Control: While rent control laws primarily apply to residential properties in New Jersey, some municipalities may have local ordinances that impact commercial leases as well. It is essential to be familiar with any local rent control regulations that may apply to your commercial lease.

Implied Warranty of Habitability: While the implied warranty of habitability primarily applies to residential leases in New Jersey, courts have occasionally extended this concept to commercial leases. This means that a landlord may have an implied duty to maintain a commercial property in a habitable and safe condition, free from defects that could negatively impact the tenant’s use of the property.

If your landlord in New Jersey is not making necessary repairs to your commercial leased property, you may have several options to address the issue. Some steps you can consider include reviewing the lease agreement to understand your rights and the landlord’s obligation, notify your landlord in writing of the necessary repairs with a clear description and photos, if possible, of issues (keep all records of communication).

If the landlord fails to make the necessary repairs within a reasonable time after being notified, consult a New Jersey attorney experienced in commercial leases who can offer guidance on your legal rights and potential remedies. Consider mediation or arbitration as a means of resolving the dispute with the landlord as these litigation alternatives typically are faster and more cost-effective.

If all other efforts have failed and the landlord continues to neglect their repair obligations, your attorney may advise you to pursue legal action. This could involve filing a lawsuit against the landlord to compel them to make the repairs, seek monetary damages, or terminate the lease. Keep in mind that litigation can be time-consuming and costly, so it’s essential to exhaust other options before pursuing this course of action.

Finding an attorney to help with your commercial lease issue in New Jersey involves several steps such as seeking referrals from friends and colleagues, searching online, or contacting the New Jersey State Bar Association.