What is a triple net lease?

Spencer AndersonOct 29, 20201 min read

Commercial real estate leases can be complicated, but they don’t have to be. Most lease types generally fall into one of two categories: triple net or full service. Here’s a brief summary of what they mean.

1. Triple net lease

The basic idea behind a triple net lease (NNN) is that the tenant takes care of the major operating expenses instead of the landlord. The three “nets” are usually defined as property taxes, insurance, and maintenance fees. The landlord may give suggestions for providers, but you, as the tenant, would be responsible for taking care of these costs. Single or double net leases are sub-categories where the landlord takes on one or two of the costs (and will likely charge you through a general operating expense cost).

2. Full-service lease

Full-service leases usually just include one big lump sum cost to the tenant for operating expenses. The landlord then uses that payment to take care of insurance, taxes, and other fees. Usually the tenant will pay an estimated cost of those expenses each month and the landlord will provide actual costs at the end of the year so both parties can reconcile any differences. These leases can be easier and less complicated for tenants, but can also be more expensive if the landlord isn’t transparent with what those operating expenses are going towards.

WRITTEN BY

Spencer Anderson