USA - NEW JERSEY Law and Practice Contributed by: Steven Fleissig, David Freylikhman, Cory Mitchell Gray and David Jensen, Greenberg Traurig LLP
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time While New Jersey does recognise licences and occupancy agreements, the most prevalent form of arrangement for the use of real estate is a lease. A licence (or occupancy agreement) will not result in the grant of an interest in property for the licensee/occupant but will rather confer a lesser right for limited use that is often termi - nable and revocable at the will of the property owner. However, the lease creates a possessory inter - est in property and affords the tenant greater rights, including exclusivity and assignability (as permitted by the landlord) and is not generally terminable prior to the expiration of the lease term, absent a default by the tenant or other nar- rowly construed circumstances. 6.2 Types of Commercial Leases Commercial Leases Commercial leases in New Jersey can be net leases or gross leases. In gross lease, the land - lord typically provides certain building services and charges a fractional share of the costs back to the tenants. In this scenario, the tenant will typically pay rent to the landlord that comprises two parts: • a base rent payment that is fixed but may increase annually; and • additional rent payments which would include operating expenses for the property such as taxes, insurance, maintenance, and utilities. Sometimes, these payments of “additional rent” are structured as payments of increases over a specified base year; other times, especially with
who sought investment capital without material interference in the business activities. 5.3 REITs REITs are available in New Jersey and can be either public or private. 5.4 Minimum Capital Requirement There are no minimum capital requirements in New Jersey. 5.5 Applicable Governance Requirements In all instances, annual reports must be filed with the State of New Jersey Division of Revenue and Enterprise Services. 5.6 Annual Entity Maintenance and Accounting Compliance Many property owners have internal account - ing groups or hire outside accounting firms to handle real estate investment entities. At mini - mum, annual reports will be required for filing for all New Jersey corporations, LLCs, non-profits, LPs, and LLPs. The process is relatively easy and can be completed online. The filing fees associated with annual reports, and which are due at the end of the relevant entity’s anniversary month are listed below: • corporations – foreign and domestic: USD75; • LLCs – foreign and domestic: USD75; • non-profits, co-operatives, and religious cor - porations: USD30; • LPs – foreign and domestic – foreign and domestic: USD75; and • LLPs – foreign and domestic: USD75.
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