Arkansas Percentage Lease Agreement Overview
An Arkansas commercial percentage lease pairs a fixed base rent with percentage rent calculated on the tenant's gross sales above an agreed breakpoint. Arkansas retail leasing markets, including Little Rock, Fayetteville, and the growing Northwest Arkansas corridor around Bentonville, use percentage lease structures in shopping centers and strip retail. Arkansas contract law governs the arrangement, and the definitions and formulas in the document control what gets paid each year.
Arkansas is a contract law state for commercial leases, meaning there are no default rules that define what a percentage lease must include if the parties left something out. The gross sales definition, breakpoint calculation, percentage rate, reporting schedule, and audit rights all need to be written into the lease document specifically. Arkansas imposes a state sales tax on retail transactions that should be excluded from the gross sales definition so the tenant is not paying percentage rent on tax collections.
$15
Filing fee
Required
Notarization
0
Witnesses required
Circuit
Filing office
Arkansas Requirements
Arkansas has specific requirements for this type of legal document. Meeting these requirements ensures your document is accepted by the circuit clerk and is legally enforceable.
Arkansas Specific Note
Arkansas contract law governs percentage leases entirely, with no statutory defaults for undefined terms. Arkansas imposes a state sales tax on retail sales that should be excluded from the gross sales definition. All financial provisions, including percentage rate, breakpoint type, reporting obligations, and audit rights, must be written into the lease explicitly. Attorney review is recommended before signing any Arkansas commercial lease.
Document Requirements
- Written Agreement Required: Arkansas Code Section 4-59-101 requires commercial leases for more than one year to be in writing and signed by both parties to be enforceable
- Gross Sales Definition: Arkansas state sales taxes collected from retail customers should be excluded from gross sales; returns, allowances, employee discounts, and sales at other locations should also be listed as exclusions
- Breakpoint Specification: The lease must state whether a natural or artificial breakpoint applies and include the calculation formula; Arkansas courts will not supply missing financial terms
- Sales Reporting Schedule: Monthly and annual reporting deadlines, certification requirements for annual statements, and record retention obligations must be specified in the lease
- Audit Rights: The landlord's right to inspect the tenant's sales records must be written into the lease; Arkansas does not imply audit rights for commercial landlords absent contractual agreement
How to File in Arkansas
Arkansas percentage leases require careful attention to the gross sales definition and breakpoint methodology. These steps walk through the key elements of creating a sound Arkansas percentage lease.
Agree on Base Rent, Percentage Rate, and Breakpoint Type
Before drafting, both parties should reach agreement on base rent, the percentage rate (typically four to seven percent for Arkansas retail), and whether the breakpoint will be natural or artificial. In the Northwest Arkansas market, retail activity around Bentonville supports lower artificial breakpoints for well-located tenants. In smaller Arkansas markets, artificial breakpoints set above natural levels are more common to reflect realistic sales volumes.
Draft the Gross Sales Definition with Sales Tax Exclusion
Write the gross sales definition to include all revenues from business operations at the premises. The exclusions list should include Arkansas state and local sales taxes collected from customers, returns and allowances, employee discounts, proceeds from gift card issuances, and sales at other business locations. The definition should also address e-commerce orders if the tenant sells products online or through a hybrid model.
Include Reporting and Audit Provisions
Set specific monthly reporting deadlines with due dates. Require an annual certified sales statement with a stated due date. Write in explicit audit rights with notice requirements, cost allocation, and a remedy for under-reporting above a stated threshold. Arkansas courts will not supply audit rights that are absent from the lease.
Add Operating Covenant and Continuous Operations Clause
Include an operating covenant requiring the tenant to remain open during agreed minimum hours and operate in a way that is reasonably expected to generate sales. For Arkansas shopping center leases, this protects the landlord's percentage rent income from a tenant who meets base rent but reduces operations to the minimum possible level.
Execute with Authorized Signatures
Both parties sign through authorized representatives. Arkansas does not require notarization for the lease to be enforceable between the parties, but recording with the county circuit clerk for notice purposes requires notarization. Each party should keep a fully executed original.
Arkansas Fees & Costs
Below is a breakdown of the typical costs associated with filing this document in Arkansas. Actual fees may vary by county.
| Fee / Cost | Amount |
|---|---|
| Base Rent (Arkansas retail shopping center) | $8 - $18 per sq ft annually |
| Percentage Rent Rate | 4% - 7% of gross sales above breakpoint |
| CAM Charges | $1.50 - $4 per sq ft annually |
| Attorney Lease Review | $500 - $1,800 |
Sample Arkansas Percentage Lease Agreement
Below is a preview of our Arkansas-specific template. Your customized document will include all fields and provisions required for filing in any Arkansas county.
PERCENTAGE LEASE AGREEMENT
STATE OF ARKANSAS
Legal Document Template
LANDLORD
Name: [Full Legal Name / Entity]
Property: [Shopping Center Name]
Address: [Property Address]
TENANT
Name: [Business Entity Name]
Trade Name: [DBA / Store Name]
Address: [Current Address]
Tax ID: [EIN]
PREMISES
Suite: [Number]
GLA: [Gross Leasable Area SF]
Use: [Permitted Retail Use]
Exclusive: [Product Category]
FINANCIAL TERMS
Base Rent: $[Amount]/month
Percentage Rate: [%]
Breakpoint: $[Amount]/year
CAM: $[Amount]/SF
Deposit: $[Amount]
Arkansas Percentage Lease Agreement FAQ
Answers to common questions about filing an percentage lease agreement in Arkansas, including requirements, fees, and procedures.
Official Arkansas Resources
Use these official state resources to verify requirements, find your local filing office, and access government forms for Arkansas.
Related Arkansas Documents
Depending on your situation, you may need additional documents alongside your Arkansas percentage lease agreement.
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