Implied Covenant of Good Faith and Fair Dealing

• It’s a covenant that isn’t a stated or written law but an underlying understanding between landlords and tenants to enter into fair dealings.

• In Maine, the court of law doesn’t recognize this implied understanding of fair dealings.

• Only the Uniform Commercial Code is an acceptable defense to any lease violations not covered in the agreement.

Statutory Notice Periods

• If either party violates the commercial lease agreement, the other party can notify them of the breach in terms. After 30 days from the notice receipt has passed, without the party correcting the violation, the other party can send a 30-day notice of termination.

• The lessor has seven (7) days to address any repair requests that harm the safety and health of the business.

• Landlords have 30 days to address other repair matters that don’t directly harm the health and safety of the premises.

Security Deposits

• Maine laws state that there is no maximum limit to how much the landlord can raise the rent on the commercial lease.

• No regulations govern when the landlord must return the security deposit. As such, it generally falls within the average notice period of between 30 and 60 days.

• The landlord can store the security deposits in any account and together with other funds if they so choose.

Disclosures

• Lead-Based Paint Disclosure: Landlords must disclose the presence of lead-based paint if the building is older than 1978. It includes explaining the hazards of this paint.

• UST Disclosure:If the lessor has a UST on the premises to store hazardous material, they must inform the tenant of it and any related information.

Termination and Renewal

• Commercial leases have a much longer term than residential agreements.

• Either party must give the other at least 60 days’ notice should they wish to terminate the lease.

• Suppose the landlord’s property is taken in execution or by any other lawful action, and the property’s ownership shifts to another individual or entity. The new owner has to give the tenant 60 days’ notice if they want to end the contract.

• The renewal terms can vary depending on the landlord’s discretion. However, the document must contain renewal terms and state the term for which the tenant can renew the agreement.

• Part of the renewal terms should be a rent escalation clause. It states that while the standard terms and conditions will hold with renewal, the lessor can escalate the rent.