Minnesota Percentage Lease Agreement Overview
A percentage lease combines fixed base rent with a percentage of gross sales above a breakpoint. In Minnesota, this structure is most common in regional shopping centers and enclosed malls. The Mall of America in Bloomington is the dominant retail center in the state and uses percentage lease structures across most of its tenant roster. Other significant Minnesota retail centers using percentage leases include Ridgedale Center (Minnetonka), Rosedale Center (Roseville), Southdale Center (Edina), and Maplewood Mall.
Minnesota commercial leases are governed by contract law. The percentage rent mechanics, gross sales definitions, and breakpoint calculations must be written with precision. Minnesota's combined sales tax rate (state 6.875 percent plus local additions in Minneapolis, St. Paul, and other cities) is among the higher rates in the Midwest and must be explicitly excluded from gross sales calculations. Minnesota retail tenants should also pay attention to the treatment of online sales and the strength of co-tenancy provisions given the changes in Minnesota mall occupancy over recent years.
$46
Filing fee
Required
Notarization
0
Witnesses required
County
Filing office
Minnesota Requirements
Minnesota percentage leases are governed by contract law. All percentage rent terms, gross sales definitions, breakpoint mechanics, and reporting obligations must be negotiated and written into the lease precisely. There are no Minnesota statutes specifically governing percentage lease provisions beyond the general commercial lease framework.
Minnesota Specific Note
Minnesota's combined sales tax rate (state 6.875 percent plus local additions in Minneapolis, St. Paul, and other cities) is among the higher combined rates in the Midwest. Sales taxes collected from customers must be explicitly excluded from gross sales for percentage rent purposes. Without this exclusion, tenants pay percentage rent on tax revenue collected for the government, not on business income. For Mall of America leases, confirm the applicable Bloomington local tax rate as well.
Key Percentage Lease Provisions for Minnesota
- Gross sales definition: Negotiate to exclude Minnesota state and local sales taxes, employee discounts, returned merchandise, and credit card fees. For omni-channel retailers, negotiate the treatment of online orders that originate or are fulfilled from the store.
- Natural breakpoint: Push for a natural breakpoint calculated as base rent divided by the percentage rate. This ensures percentage rent does not trigger until sales have effectively covered the full base rent obligation.
- Co-tenancy protections: Negotiate co-tenancy provisions tied to specific anchor tenants. For Mall of America, the co-tenancy structure is more complex given the property's scale. For other Minnesota malls, identify the key anchors and negotiate meaningful remedies if those anchors close.
- CAM provisions: Minnesota shopping centers often have substantial CAM charges due to winter maintenance, heating, and snow removal for large parking areas. Negotiate CAM caps on controllable expenses and confirm exclusions for capital improvements and excessive management fees.
- Audit rights: Confirm both parties' audit rights, the timing window (typically 12 months), and how disputes are resolved. Retain sales and POS records for the full audit period.
How to File in Minnesota
Filing a percentage lease agreement in Minnesota involves preparing the document, getting it properly executed, and filing it with the appropriate county office. Follow these steps.
Research the Minnesota Location and Comparable Sales Data
Before negotiating a Minnesota percentage lease, research the retail center's foot traffic, anchor composition, and comparable tenant sales performance. Minnesota mall productivity varies significantly by property. Mall of America is a unique high-traffic destination. Other Twin Cities area malls operate in more competitive suburban retail environments with different sales dynamics.
Negotiate Gross Sales Definition and Breakpoint
Negotiate to exclude Minnesota state and applicable local sales taxes from gross sales. Push for a natural breakpoint. Address the treatment of online sales if your business has omni-channel activity. For Mall of America leases, confirm the specific Bloomington local tax that applies and ensure it is excluded from gross sales.
Address Co-Tenancy, CAM, and Audit Provisions
Negotiate co-tenancy protections tied to named anchors for your specific Minnesota shopping center. Negotiate CAM caps that account for Minnesota's winter maintenance costs (snow removal, heating, parking lot upkeep) being higher than national averages. Confirm audit rights for both sales reporting and CAM reconciliations.
Have a Minnesota Retail Lease Attorney Review
A Minnesota commercial real estate attorney familiar with Twin Cities retail market standards is essential for any major retail lease commitment. For Mall of America leases in particular, experienced legal counsel is critical given the complexity of that property's lease documents. Minnesota attorney rates typically run $250 to $450 per hour.
Execute the Lease and Set Up Sales Tracking
Sign the lease and retain executed copies. Set up point-of-sale or accounting systems that track gross sales in the format required by the lease. Calendar percentage rent reporting deadlines and establish records retention for the full audit window. For Minnesota mall leases, also track CAM budget versus actual and retain those records as well.
Minnesota Fees & Costs
Below is a breakdown of the typical costs associated with filing this document in Minnesota. Actual fees may vary by county.
| Fee / Cost | Amount |
|---|---|
| Minnesota Attorney (hourly) | $250 - $450 per hour (Twin Cities) |
| Base Rent (annual per sqft) | $25 - $75+/sqft (varies by center; Mall of America higher) |
| Percentage Rate (above breakpoint) | 2% - 9% depending on retail category |
| CAM Charges (annual per sqft) | $8 - $20+/sqft including elevated winter maintenance costs |
Sample Minnesota Percentage Lease Agreement
Below is a preview of our Minnesota-specific template. Your customized document will include all fields and provisions required for filing in any Minnesota county.
PERCENTAGE LEASE AGREEMENT
STATE OF MINNESOTA
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]
Minnesota Percentage Lease Agreement FAQ
Answers to common questions about filing a percentage lease agreement in Minnesota, including requirements, fees, and procedures.
Official Minnesota Resources
Use these official state resources to verify requirements, find your local filing office, and access government forms for Minnesota.
Related Minnesota Documents
Depending on your situation, you may need additional documents alongside your Minnesota percentage lease agreement.
Create your Minnesota Commercial Percentage Lease Agreement in under 5 minutes.
Answer a few questions and download a Minnesota-compliant document, ready for the state agency.