double net lease example

not only will you have to conduct some basic background checks and get an idea about expectations, but you will also need to determine the type of lease you desire, choosing the right lease for your property ensures you are protecting your interests. still, to give you an idea, we wanted to cover the topic of double net lease (nn). before delving into the details, let us first give you a list of the most common types of net leases and what they cover. for the percentage lease, tenants pay a base rent and a percentage of their monthly sales.

standard triple net lease

real estate investors looking for a core portfolio holding with stable cash flow and relatively little involvement in the day to day operations of the property often consider investing in triple net lease properties—here’s why. in a gross lease, the property owner charges tenants one monthly amount for rent and uses that income to pay the property’s operating expenses. for the tenant, it is beneficial because it is a relatively simple structure and places the risk of rising costs on the property owner. for the tenant, a net lease is beneficial because it allows them to pay a lower base rental amount, but they bear the risk of rising operating costs.

double net lease agreement

a double net lease is a lease structure where the tenant is responsible for paying for two expenses associated with the property. although the double net lease structure can be defined in simple terms as we did above, it is important to take a step back and understand the spectrum of all commercial real estate leases. in absolute net leases, the tenant pays for all expenses associated with a property. this is why the most important thing to understand about commercial real estate leases is that the only way to understand a lease agreement is to read it. although the lease structure itself may sound simple enough because it only requires the tenant to pay for property taxes and insurance, there is often complexity hidden in a lease agreement.

retail lease contract

each reference in this lease to a basic lease provision shall be construed to incorporate all of the terms provided for under such provisions. (a) tenant shall pay to landlord monthly percentage rent in excess of the monthly base rent for each calendar month during which tenant occupies the leased premises. in addition, landlord shall have the right to employ an accounting representative of landlord’s choice to examine such books and records as may be necessary to certify the amount of tenant’s gross sales for such lease year, and tenant shall promptly pay to landlord the cost of such audit. except as expressly provided to be paid by landlord, tenant shall pay any and all sums of money or charges required to be paid by tenant under this lease promptly when the same are due. except as may be otherwise specifically provided in this lease to the contrary, tenant shall pay any and all costs and expenses of any kind relating to the leased premises and/or the improvements or arising from its or their use or operation, except for debt service on mortgages imposed by landlord. title to any of tenant’s property remaining in or on the leased premises or the improvements after such date shall be vested in landlord without further act or instrument. so long as tenant has an obligation to repair or restore the improvements, all insurance proceeds shall be made available to tenant and shall be used by tenant for repair or restoration of improvements.

net net lease agreement

james chen, cmt is an expert trader, investment adviser, and global market strategist. a double net lease (also known as a ‘net-net’ or ‘nn’ lease) is a lease agreement in which the tenant is responsible for both property taxes and premiums for insuring the building. the landlord is still held responsible for structural maintenance expenses. they are lease agreements between landlords and tenants where the tenant pays for rent and any other cost associated with the property in question. most landlords generally accept lower rent payments because of the additional costs associated with net leases.

gross commercial lease agreement

the tenant is only responsible for the base rent and enjoys the freedom of a hands-off approach. modified gross leases are where the commercial tenant pays a base rent in addition to a portion of ongoing and incidental charges, such as taxes, utilities, maintenance, and insurance. the main difference between triple net (nnn) lease and gross leases is that nnn leases don’t include maintenance, repair, and upkeep, whereas a gross lease generally does . the tenant is responsible for unexpected repairs under a gross lease.

commercial and residential lease

california law treats residential and commercial leases very differently. for starters, a residential lease agreement is a contract between a tenant and a landlord to use property for living. residential leases generally contain a provision that the tenant may not use the property for commercial purposes, or for the purpose of earning a profit. the rent is usually a set amount every month, and the term of the lease is generally a year.

triple net lease terms

while a triple net lease might appear to heavily favor landlords in light of the extra costs and tax inefficiencies but that doesn’t have to be the case. if you negotiate well and leverage your advantages to maximum impact, a triple net lease could be a financial benefit to your company. the triple net lease is an excellent example of this with benefits that make them attractive for some tenants and challenges that make them a hindrance to others. take into account your own specific goals and expectations when choosing between lease types and not necessarily what happens to be trending in commercial office space at the time. often referred to as an nnn lease, a triple net lease is an arrangement where the tenant pays either a portion or all of an office space’s ongoing expenses in addition to the base rent. the most obvious benefit of using a triple net lease for a tenant is a lower price point for the base lease. since the tenant is absorbing at least some of the taxes, insurance, and maintenance expenses, a triple net lease features a lower monthly rent than a gross lease agreement.