Triple Net (NNN) Commercial Lease

A Triple Net (NNN) Commercial Lease is a commercial lease agreement that requires the tenant to pay all or part of the taxes, fees, and maintenance costs for a property in addition to rent.

• Context:
  • It can (typically) be one of the most landlord-favorable leases, as it shifts the burden of property expenses to the tenant.
  • It can (typically) require the tenant to be responsible for: property taxes, insurance, and maintenance (often including Common Area Maintenance (CAM) charge).
  • It can (typically) be more financially burdensome for the tenant compared to other lease types.
  • It can (often) be used in the leasing of commercial properties, such as retail spaces, office buildings, and industrial sites.
  • It can (typically) provide more predictable expenses for landlords, as the costs associated with property taxes, insurance, and maintenance are passed through to the tenant.
  • It can (often) include a clause that allows for the escalation of rent to cover increases in property taxes, insurance premiums, and maintenance costs over time.
  • It can (often) require the tenant to handle administrative tasks related to the payment of taxes, insurance, and maintenance expenses, which would normally be managed by the property owner in other lease agreements.
  • ...
• Example(s):
  • A commercial retail store leasing space in a shopping center under a Triple Net (NNN) Lease where the store is responsible for its proportionate share of the property taxes, building insurance, and common area maintenance costs, in addition to its monthly rent.
  • An office building tenant who, under a Triple Net (NNN) Lease, pays for all utilities, janitorial services, and any repairs or maintenance required inside their leased space, on top of the property's taxes, insurance, and common area maintenance charges.
  • ...
• Counter-Example(s):
  • A Gross Lease where the tenant pays a flat rental rate, and the landlord is responsible for all property-related costs.
  • A Modified Gross Lease where the tenant and landlord share some of the costs for taxes, insurance, and/or maintenance.
• See: Common Area Maintenance Charges, Real Estate, Net Lease, Recoverable Expense, Gross Lease, Single Net Lease, Double Net Lease, Property Taxes, Insurance, Stanford University.

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References

2024

• (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/NNN_lease Retrieved:2024-3-26.
  • In commercial real estate leases in the United States, the landlord, rather than the tenant, is usually responsible for real estate taxes, maintenance, and insurance. In a "net lease", in addition to base rent, the tenant or lessee is responsible for paying some or all of the recoverable expenses related to real-estate ownership. As the rent collected under a net lease is "net" after expenses are passed through to tenants to be paid, the rent tends to be lower than rent charged under a "gross lease".

    Net lease types include single net, double net, and triple net leases, depending on the number of items they include. The term "net lease" is often used as a shorthand expression for any of these arrangements. The three most common expenses charged back are property taxes, insurance, and maintenance, often called the "three nets". A triple net lease that includes the three nets is particularly common and is often abbreviated in writing as "NNN lease" but is still pronounced as "triple net lease".

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