What on earth is a triple net lease?

The first time I heard triple net lease I was pretty sure it must have something to do with a basketball goal that’s worth 3 points.  Commercial real estate is full of words and phrases that aren’t self explanatory and this is a great example.  Let me attempt to explain it in plain English.

A Gross lease is when the landlord pays all of the expenses associated with owning the property.

A Net lease is when the lessee (the party renting or leasing the property, aka tenant), pays, in addition to rent, the expenses associated with owning the property.

You might be wondering, what are all of the expenses associated with owning the property???  Great question.  These include the property taxes, the insurance premiums, and the maintenance costs.

That’s great and all, but you are here to find out what a triple net lease is, so here it is:

Triple Net Lease (NNN):  Lessee (tenant) pays real estate taxes(first net or N), insurance premiums(second net or N), and maintenance(third net or N) in addition to the rent.

Double Net Lease (NN):  Lessee (tenant) pays real estate taxes(first net or N) and insurance premiums(second net or N) in addition to the rent.

Single Net Lease (N):  Lessee (tenant) pays real estate taxes(first net or N) in addition to the rent.

Gross Lease:  Lessee (tenant) pays only rent.

Hopefully that clears it up!  Nothing to do with basketball, unless, of course, you are leasing commercial real estate with a basketball court.  ( :

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3 Responses to What on earth is a triple net lease?

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