Minnesota Commercial Lease Agreement

Implied Covenant of Good Faith and Fair Dealing

• Minnesota is widely considered a landlord-friendly state when it comes to both its residential and commercial agreements. This means that commercial leases offer less consumer protection than residential agreements. This is why potential tenants must understand that they can and should negotiate the terms when applicable. 

• Despite this, the laws still expect landlords and tenants to enter into a covenant of good faith and fair dealing when entering into a commercial agreement. It’s also important to note that a written agreement is required for any Minnesota commercial lease agreement.

Statutory Notice Periods

There are several statutory notice periods applicable in Minnesota. 

• If a tenant doesn’t pay the rent on time, the landlord can proceed to post a notice to pay rent within three (3) days; otherwise, the eviction process can commence. 
• It’s important to note that landlords must provide proof that they delivered the notice and will have to follow the legal eviction process by filing with the courts.
• Landlords are also allowed to evict tenants for damage or misuse of the property. This includes tenants causing damage to the property or not using it in accordance with the use clause in the agreement. In this case, the landlord must give 15 days’ notice to rectify the issues. 

Once the eviction process starts and the judgment falls in favor of the landlord, the tenant will be liable for several expenses. Not only can the tenant be responsible for paying the legal fees and rent past due, but they may also be liable for the remaining rent through to the end of the rental term. In this case, the courts expect the landlord to make a good-faith effort to find a new tenant and mitigate his losses, thus releasing the tenant from his responsibility.

Security Deposits

• Minnesota state law doesn’t restrict the amount that landlords can charge as a security deposit for commercial leases. 
• There are also currently no regulations governing the return of security deposits. As such, tenants will need to refer to their lease for clarity on this matter. 

Disclosures

Several required legal disclosures should appear on any lease in the state of Minnesota. These disclosures include:

• Landlord and authorized parties’ names and addresses.
• Late fees disclosure
• Financial distress disclosure
• Shared utility disclosure
• Covenant of landlord/tenant disclosure
• Lead-based paint disclosure
• Outstanding inspections disclosure

Termination and Renewal

• A written agreement must govern all commercial leases in Minnesota. 
• In leases with a set term, the termination and process for renewal will be outlined in the agreement. 
• Some leases in Minnesota may also include an automatic renewal clause for terms longer than two (2) months.