What is Triple Net?

An NNN Lease, commonly referred to as Triple Net, is a commonly used commercial lease structure that requires the tenant to pay, in addition to its monthly rent, all costs associated with the operation of the building. Here is an overview of Triple Net, or an NNN Lease, and key concepts to be familiar with.

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What Is Triple Net?

Any number of costs can fall under a net lease, but Triple Net generally refers to the payment of property taxes, maintenance costs and insurance premiums, in addition to the base monthly rent. A Triple Net lease differs from a gross lease in that a gross lease is for a flat monthly amount, inclusive of all operational costs.

The Three “Nets”

Triple Net refers to the following three net taxes:

  • Real Estate Taxes: The terms of the lease will stipulate which taxes the tenant is responsible for. This may be associated with lower rent payments but higher property taxes.
  • Building Insurance: Commercial leases are for buildings where commercial activities take place. Building insurance payments and other business taxes are the responsibility of the tenant.
  • Maintenance: The tenant is responsible for all maintenance costs. This can be a hidden fee if the building is older or in poor shape.

The Triple Net lease is also commonly referred to as a true net lease because all costs relating to the operation of building are passed onto the tenant or tenants.

Leases for commercial real estate vary greatly, so it is important to seek the advice of a commercial real estate attorney to help you understand each item, and which costs are standard.   The experienced attorneys at Structure Law Group are here to help with all of your commercial real estate needs.

About Structure Law Group, LLP

Structure Law Group is a San Jose based law firm that serves its clients’ business, employment and real estate needs, including but not limited to all types of commercial real estate transactions, business formations, debt and equity investments, employment agreements, commercial contracts and related business litigation.

 

 

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