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L.D. 1646

The Maine Leaseholders Association

LD 1646, LR 2269 01 UNOFFICIAL - 05-05-2005, 08:13:05

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 14 MRSA 6047, sub-1, as repealed and replaced by PL 2003, c. 510, Pt. A, 12, is amended to read:

  1. Parties to agreement; purposes of agreement. This chapter applies to agreements between:
    • A person, referred to in this chapter as the "lessor," who owns land in territory under jurisdiction of the Maine Land Use Regulation Commission this State; and
    • A person, referred to in this chapter as the "lessee," who intends to construct or to occupy a building or buildings owned by that person on leased land in territory under jurisdiction of the Maine Land Use Regulation Commission this State for recreational or residential purposes on a seasonal or year-round basis or to operate a business consisting of a commercial sporting camp, campground or retail store.

This chapter does not apply to a trailer park, condominium, timeshare or apartment house.

Sec. 2. 14 MRSA 6048, as repealed and replaced by PL 2003, c. 510, Pt. A, 12, is amended to read:

6048. Written lease and description required

An agreement described in section 6047 must be made in the form of a written lease and must include at least a general description of the boundaries of the land to be leased.

Before June 1, 2007, a lessor shall prepare a full boundary survey by a professional land surveyor of all leaseholds in its possession and record a plastic mylar map of this boundary survey in the registry of deeds for the county in which the real estate is located.

If a lessor offers to sell the real estate to a lessee for its fair market value, as defined by section 6050, prior to June 1, 2007, then this conveyance is subject to the same exemptions and conditions described in sections 6050-A, 6050-B, 6050-C and 6050-D.

The cost of a survey for real estate sold pursuant to this section prior to June 1, 2007 must be borne by the lessee, who shall choose the surveyor.

A lessor who fails to prepare and record a full boundary survey, as required by this section, does not qualify for the Maine Tree Growth Tax Law for the municipality in which the leasehold is located.

The cost of a survey for real estate sold pursuant to this section after June 1, 2007 must be borne by the lessor, who shall choose the surveyor. The fee for such a survey may not be subtracted from the future sale price of said real estate.

Sec. 3. 14 MRSA 6049, as repealed and replaced by PL 2003, c. 510, Pt. A, 12, is repealed.

Sec. 4. 14 MRSA 6049-A is enacted to read:

6049-A. Termination

A lessee may terminate a lease earlier than the effective date provided in the lease.

A lessor may not terminate a lease without just cause and the burden of proof is on the lessor to show just cause.

Termination provisions of a lease to the extent inconsistent with this section are void, beginning on the date the notice of termination is provided.

A lessor shall reimburse a lessee for the fair market value of all improvements on leased real estate, if the lessee's lease is terminated by the lessor.

Sec. 5. 14 MRSA 6050, as enacted by PL 2003, c. 510, Pt. A, 12, is repealed and the following enacted in its place:

6050. Right of first refusal

After October 1, 2005, a lessee of premises on which a structure owned by the lessee exists has the right of first refusal for the fair market value of the leasehold with regard to the leased premises if the lessor intends to sell any real estate in this State. The lessor shall give the lessee at least one year to accept the offer to purchase the leased premises by certified mail, return receipt requested, restricted delivery.

As used in this section, "fair market value" means the assessment according to the Department of Administrative and Financial Services, Bureau of Revenue Services in the unorganized territory or the assessment by a municipality in an organized municipality.

If a lessee does not elect to purchase the leased premises, the lease must continue with the same terms, other than annual rental fees, for no less than 50 years with the annual rental fee being not more than 5% of the fair market value of the leased premises, excluding improvements. The lessor may not impose any additional fees and the lessor may not amend any lease in effect prior to January 1, 2005 without the consent of the lessee.

A lessor who violates this section does not qualify for the Maine Tree Growth Tax Law for the municipality in which the leasehold is located.

All conveyances of real estate by the lessor must be made subject to all leases in effect at the time of conveyance.

All lessors and their successors in interest shall honor all leases in effect at the time of any conveyance.

Sec. 6. 14 MRSA 6050-A to 6050-F are enacted to read:

6050-A. Capital gains taxation

For real estate sold pursuant to this chapter prior to December 31, 2007, the grantor does not incur capital gains tax under the laws of this State if the real estate is sold for its fair market value as defined in section 6050.

6050-B. Subdivision

The sale of real estate pursuant to this chapter is exempt from the subdivision laws in Title 30-A, sections 4401 to 4406.

6050-C. Maine Land Use Regulation Commission

The sale of real estate pursuant to this chapter is exempt from the laws relating to the Maine Land Use Regulation Commission, Title 12, chapter 206-A, subchapter 2 and the rules of the Maine Land Use Regulation Commission as they relate to the conveyance of real estate in the unorganized territory, except for subsurface waste disposal issues. These laws and rules apply to this real estate following its conveyance.

6050-D. Easements

All real estate conveyed pursuant to this chapter has a perpetual easement by necessity from a State-maintained highway, no less than 16.5 feet in width or its current width, whichever is greater.

6050-E. Binding arbitration

All boundary disputes must be resolved in binding arbitration between the lessor, the lessee and any other parties in interest by an arbitrator approved by a national arbitration association. The fee for this arbitration must be shared equally between the lessor, lessee and any other parties in interest. The arbitrator must be assigned by a national arbitration association.

The courts of this State have no jurisdiction over this section, and there is no right of appeal.

6050-F. Minimum lot size

The minimum lot size for leased premises must be determined as follows. The description of the current lease of the leased premises must be examined. If the description describes leased premises that are less than 20,000 square feet and the current lessee held the lease prior to the effective date of Title 12, section 4807-A, then the lessee is exempt from the requirements of section 4807-A. If there is no description, the boundaries are those occupied by the lessee.

Sec. 7. Application. Except as otherwise provided, this Act applies to agreements entered into or renewed on or after October 1, 2005.

SUMMARY

This bill changes the laws governing buildings on leased land in the following ways.

  1. It provides that these laws apply to land in an organized area as well as to land in the unorganized territory.
  2. It provides that a lessor may not terminate a lease without just cause and that a lessor shall reimburse a lessee for the fair market value of all improvements on the leased real estate if the lessor terminates the lease.
  3. It provides a lessee with a right of first refusal for the fair market value of the leased land with regard to the leased premises if the lessor intends to sell any real estate in this State. If a lessee does not elect to purchase the leased premises, the lease continues with the same terms, except for annual rental fees, for no less than 50 years. The annual rental fee is capped at 5% of the fair market value of the leased premises, excluding improvements.
  4. It exempts certain transactions from capital gains taxation and certain land use laws.

The Maine Leaseholders Association