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Is A Commercial Triple Net Lease Right For You?

A commercial triple net lease is a special type of arrangement where the property owner hands over more responsibility for the property to the renter. Instead of just paying their regular rent, the renter will also be responsible for three other types of property expenses.

The extra expenses that are passed to the renter include all maintenance fees, rental insurance policies, and property taxes. Obviously, this is where the name “triple net” comes from.

In most other types of commercial leases, the property owner is responsible for all upkeep on the property as well as the taxes and other expenses related to the property. The renter typically holds their own renters insurance and pays rent on a monthly basis, but has no other responsibilities for the property they are using.

When something goes wrong on the property and repairs or additional maintenance are needed, in a gross lease the owner of the property would be responsible for taking care of it. The renter is only obligated to report what needs to be done and keep up with the rent.

The expense of renting the property is a lot higher with a triple net lease, because the renter has to fix problems, make repairs, and keep up with all regular maintenance procedures on their own. The property owner is released from these obligations with this type of agreement, usually in exchange for a lower rent.

This type of lease is usually preferred by renters who want more control over the property without actually buying their own property. Companies who do not want any additional expense or responsibility for property will look for a more typical gross lease.

In the case that a property owner needs to be released from responsibility or obligation to the property, they may require this type of lease. Usually, they will offer a lower rent price in exchange.

If you are looking into getting a net lease, or NNN lease make sure to plan accordingly. There are certain costs like rental insurance and possible property tax responsibilities that you may be required to pay.

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