Triple Net Lease

A triple net lease (NNN lease) is a type of commercial real estate lease agreement where the tenant is responsible for paying not only the rent but also the three primary operating expenses associated with the property. These expenses typically include:

Property Taxes:

The tenant pays the property taxes on the leased space.

Insurance:

The tenant covers the insurance premiums for the property, often including liability insurance.

Maintenance:

The tenant is responsible for maintaining the property, which can include repairs, upkeep, and sometimes even structural maintenance.

In a triple net lease, the landlord’s financial responsibility is limited primarily to the mortgage on the property, if any, and profit from the lease. This type of lease is commonly used in commercial real estate, such as retail spaces, industrial properties, and office buildings.

Triple net leases are attractive to landlords because they transfer most of the property’s risk and cost burdens to the tenant. Tenants, on the other hand, often benefit from lower base rent in a triple net lease compared to other lease types, but they must be prepared to handle the additional costs of property expenses.