New Mexico Percentage Lease Agreement Overview
Percentage leases are most common in New Mexico retail contexts, particularly in the Albuquerque and Santa Fe shopping center markets. They combine a fixed base rent with a percentage of the tenant's gross sales, giving landlords upside when tenants perform well while providing tenants with a lower guaranteed rent floor during slower periods. The structure aligns landlord and tenant interests in a way that pure fixed-rent leases do not.
One New Mexico-specific consideration in percentage leases is the gross receipts tax. Because New Mexico's GRT applies to the tenant's business receipts, both parties need to agree clearly on whether GRT collected from customers is included in or excluded from the gross sales figure used to calculate percentage rent. If not addressed, the tenant could be paying percentage rent on a tax obligation they owe to the state, which effectively inflates the rent cost beyond what was intended.
$25
Filing fee
Required
Notarization
0
Witnesses required
County
Filing office
New Mexico Percentage Lease Requirements
New Mexico percentage leases are governed by contract law with no special commercial tenant statutes prescribing default terms. The gross sales definition, breakpoint, percentage rate, reporting requirements, and audit rights are all negotiated by the parties. Getting these provisions right matters enormously because they determine what the tenant actually pays over the lease term.
New Mexico GRT and Gross Sales Definition
New Mexico's gross receipts tax is a tax on the tenant's receipts from business. If the gross sales definition in a percentage lease does not exclude the GRT component of receipts, the tenant may end up paying percentage rent on money that went directly to the state as a tax. Tenants should negotiate to exclude GRT collected and remitted from the gross sales calculation, and landlords should confirm the GRT treatment in the lease is what they intend.
Key Provisions for New Mexico Percentage Leases
- Gross Sales Definition: Define exactly what counts as gross sales and list specific exclusions including returns, employee discounts, and GRT
- Breakpoint: State whether the breakpoint is natural (base rent divided by percentage rate) or artificial (a negotiated fixed amount)
- Percentage Rate: Set the percentage rate for the applicable retail category and specify whether it applies to all sales or only to sales above the breakpoint
- Sales Reporting: Require monthly or quarterly sales reports with an annual certified statement, and specify the reporting format and deadline
- Landlord Audit Rights: Define the landlord's right to audit the tenant's sales records and the process for handling discrepancies
- Co-Tenancy Clause: If the tenant's business depends on anchor traffic, negotiate a co-tenancy provision addressing rights if an anchor vacates
How to Negotiate a New Mexico Percentage Lease
A percentage lease requires more upfront negotiation than a simple fixed-rent lease. Getting the key economic terms right before signing will save significant money over the lease term.
Project Your Sales and Model the Percentage Rent
Before negotiating, run projections at multiple sales volumes to understand what percentage rent would cost at different performance levels relative to the proposed base rent and breakpoint
Negotiate the Gross Sales Definition and GRT Exclusion
Define gross sales specifically and negotiate to exclude New Mexico GRT, returns, employee sales, and other appropriate items from the base on which percentage rent is calculated
Set the Breakpoint and Percentage Rate
Negotiate whether to use a natural or artificial breakpoint, and confirm the percentage rate is appropriate for your retail category in the New Mexico market
Define Reporting and Record Keeping Obligations
Set clear monthly or quarterly sales reporting requirements and an annual certified statement deadline. Understand the landlord's audit rights and maintain complete sales records from the first day of operations
Execute the Lease and Set Up Reporting Systems
Sign the final lease and immediately set up your point of sale and accounting systems to track gross sales in the categories defined by the lease
New Mexico Fees & Costs
Below is a breakdown of the typical costs associated with filing this document in New Mexico. Actual fees may vary by county.
| Fee / Cost | Amount |
|---|---|
| Minimum Base Rent | Varies by location; Albuquerque retail $12 - $24 per sq ft NNN or modified gross depending on structure |
| Percentage Rent Rate | Typically 3% - 8% of gross sales above breakpoint depending on retail category |
| New Mexico GRT (Tenant's Business) | Varies by municipality; typically 7% - 9% of business receipts; negotiate exclusion from gross sales definition |
| Attorney Review | $400 - $900 for New Mexico percentage lease review given complexity of gross sales and breakpoint provisions |
Sample New Mexico Percentage Lease Agreement
Below is a preview of our New Mexico-specific template. Your customized document will include all fields and provisions required for filing in any New Mexico county.
PERCENTAGE LEASE AGREEMENT
STATE OF NEW MEXICO
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]
New Mexico Percentage Lease Agreement FAQ
Answers to common questions about filing a percentage lease agreement in New Mexico, including requirements, fees, and procedures.
Official New Mexico Resources
Use these official state resources to verify requirements, find your local filing office, and access government forms for New Mexico.
Related New Mexico Documents
Depending on your situation, you may need additional documents alongside your New Mexico percentage lease agreement.
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