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V O L . X X V I N O. X V I 58 Fact Book / Doing Business in Maine E ven in the best of times, commer- cial leases can be challenging to navigate. In the wake of COVID-19, most business owners are reconsidering a number of factors as they work their way back to something that resembles business as usual. For many, this might include taking a closer look at the best way to move forward with existing or future commercial leases. ere are several steps that business owners can take in preparing to negoti- ate commercial leases that will help avoid costly mistakes down the line. 1. Know how commercial leases differ before making your decision Commercial tenants should have a general understanding of the types of leases they might encounter when con- sidering a new space for their business. Specifically, they should know the dif- ference between the following: A gross lease is one in which the tenant pays a base rent amount and the landlord is responsible for pay- ing for all building related expenses (such as taxes, insurance and gen- eral maintenance). A triple net lease is requires the tenant to pay base rent and also reimburse the landlord for a pro- portionate share of all of the land- lord's building operating expenses. A modified gross lease falls in the middle. is type of lease includes a base rent amount, but the tenant also pays the landlord its proportionate share of the increase in the building's operating expenses over a base year (generally the first year of the lease). 2. Ask a landlord about additional expenses If you're in a situation where you're con- sidering a triple net or modified gross lease, you'll want to have a clear under- standing from your landlord of how to prepare for expenses above and beyond the base rent you agree to. Ask about anticipated expenses for maintenance. 3. Be sure your new lease agreement includes a force majeure clause ere will be ramifications from COVID-19 for years to come, and many people will be more aware than ever before of the necessity of force majeure clauses in business documents. Essentially, this clause excuses either party from their contractual obligations in the event of circumstances beyond their control such as acts of god, epi- demics, or other events that would sig- nificantly impact the ability to operate business as usual. Typically, these clauses excuse performance of one kind or another, and are most often associated with landlord or tenant fit-up obliga- tions. But these clauses could also cover rent payment obligations if drafted properly. Landlords will be hesitant to simply include in the lease a provision that allows a tenant to avoid paying rent in the event of another pandemic or similar occurrence. is may become the subject of negotiation, with a likely outcome being an agreement allowing rent deferral under certain force majeure situations. 4. Expanded insurance coverages may be available As many business owners have pain- fully discovered, their existing business interruption insurance coverages did not cover closures resulting from the pandemic. ere will likely be changes in the insurance industry in this regard, and business owners need to discuss with their insurer the availability of expanded business interruption coverages that would provide some protection if a simi- lar situation were to occur in the future. Have these discussions prior to entering into a lease so you better understand the potential risks. A well drafted lease will provide comfort and a level of protec- tion to a commercial tenant. Drew Anderson is a partner at Mur ray Plumb & Mur ray and chair of the firm's real estate, finance and real estate succession p l a n n i n g g r o u p . H e c a n b e reached at danderson @ mpmlaw.com. Choose the best commercial lease for your business B Y D R E W A N D E R S O N B Y D R E W A N D E R S O N pcmcompany.com 207-618-7500 M A I N E A N D N E W J E R S E Y Accuracy You Can Build On " PCM was a key partner to Harriman on the Yarmouth School projects. PCM provided estimating throughout the design process. Not only did PCM demonstrate their expertise with estimating, they advised on construction phasing and strategies for timing to release documents for bidding to the construction market. We continue to build on our successful relationship with PCM and look forward to collaborating on future projects." — Wendi Holden Project Manager C O S T E S T I M A T I N G | C P M S C H E D U L I N G | C O N S T R U C T I O N S U P P O R T S E R V I C E S | C O S T & C L A I M S A N A L Y S I S H OW TO B U S I N E S S R E S O U R C E S 200 200 IDEAS FOR MAINE'S BICENTENNIAL MBNA, one of the nation's largest credit card companies, moves into Camden's former Knox Woolen Mill buildings in the 1990s, creating hundreds of jobs, jumpstarting the midcoast economy and funding arts-and-cul- ture programming.

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