USA – NEW JERSEY Law and Practice Contributed by: David Freylikhman, Cory Mitchell Gray, David Jensen and Jody Saltzman, Greenberg Traurig LLP
handle real estate investment entities. At mini - mum, annual reports will be required for filing for all New Jersey corporations, LLCs, non-profits, limited partnerships and limited liability partner - ships. The process is relatively easy and can be completed online along with payment of appli - cable filing fees. 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. The lease creates a possessory interest in prop - erty and affords the tenant greater rights, includ - ing exclusivity and assignability (as permitted by the landlord) and is not generally terminable prior to the expiry of the lease term, in the absence of a default by the tenant or other narrowly con - strued circumstances. 6.2 Types of Commercial Leases Commercial Leases Commercial leases in New Jersey can be net leases or gross leases. In a gross lease, the land - lord typically provides certain building services to tenants and charges back to said tenants a fractional share of the costs (sometimes above a base year and at other times at the amounts then-expended). 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 real estate taxes, insurance, main - tenance and utilities (which are often those incurred by the landlord above a set base year). Typically, gross leases are seen in shopping cen - tres, office buildings and other properties where there are multiple tenants in a single building. Conversely, with a net lease, the tenant pays a base rent payment to the landlord and sepa - rately contracts for and/or pays other costs and expenses of the property directly to the service provider or other proper payee. In a triple-net lease, for instance, the tenant would pay a fixed rent to the landlord monthly and separately pay all costs and expenses of the real property such as real estate taxes, insurance, maintenance and utilities. Modified net leases may place certain burdens on the landlord to maintain the roof and structure regardless of whether a tenant leases the entire property. Ground Leases Ground leases are another type of lease in New Jersey. Typically, the landlord leases only the land to the tenant for a term of 20 or more years and maintains a reversionary interest where, upon expiry of the lease, the land and all improvements (whether installed by the ten - ant or the landlord) will revert to and be owned by the landlord at the expiry of the term. During the term of the ground lease, the tenant will be
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