Triple Net Lease Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Triple Net Lease, written in plain English, along with examples of how it is used.
What is Triple Net Lease?
It is a lease agreement where it is agreed by the tenant or leasee that he would pay all maintenance bills ( repairs, upgrades), property taxes and the insurance of that property , in addtion to the normal agreed rent.The rent is comparatively lower but the owner of the property is relieved as his financial responsibilities towards taxes,insurance and maintenance are taken care of by the leasee.
History and Meaning of Triple Net Lease
A Triple Net Lease, also known as NNN lease, is a type of commercial lease agreement commonly used for retail spaces or commercial properties. The term "triple net" refers to the tenant's responsibility to pay for three different expenses in addition to the base rent: property taxes, insurance, and maintenance.
This type of lease shifted the financial burden of operating a property from the landlord to the tenant. A Triple Net Lease began gaining popularity in the 1980s, and it has become a common practice in the commercial real estate industry. It provides long-term stability for both landlords and tenants, as tenant's rent is comparatively lower, but spread over a longer amount of time. This type of lease is popular amongst larger tenants, such as chain stores, who consider paying additional expenses as a trade-off for financial flexibility and an extended lease.
Examples of Triple Net Lease
Here are a few examples of how the term Triple Net Lease could be used:
The new restaurant in town signed a triple net lease for their building, which meant that they were responsible for not only the rent, but also the property taxes, insurance, and maintenance.
A landlord was given an offer on his commercial property for a triple net lease from a tenant who planned to open a thrift store. The proposal stipulated that the tenant would handle every single operating expense associated with the space.
The landlord presented a triple net lease option to a tenant opening a new office park in a mall. Unlike a traditional lease, where the landlord is responsible for maintaining a property and related taxes, the tenant would be responsible for all of it.
Legal Terms similar to Triple Net Lease
- Gross Lease - The tenant only pays rent, and the landlord is responsible for taxes, maintenance, insurance, and all other operating costs associated with running the property.
- Modified Gross Lease - A mixed approach, where the tenant and landlord agree to share the costs of the maintenance, taxes, and insurance.
- Double Net Lease - The tenant is responsible for maintenance and insurance costs, and the landlord is responsible for property taxes.