Commercial tenants sometimes refer to a lease as triple-net. The industry-accepted abbreviation for this term is “NNN.” Triple-net leases are different than a regular, or single-net, commercial lease.
The triple-net lease transfers all of the costs associated with a property to the tenant. These costs include real estate taxes, maintenance, repairs and insurance.
There is a form of triple-net lease even more encompassing than a regular triple-net lease. It is often referred to as an “absolute triple-net lease” and makes the tenant responsible for things such as rebuilding after total destruction of the property.
The rent on a triple-net lease is generally lower than other types of commercial leases. If a tenant is able to personally take care of the maintenance and repairs, he might save some money on the total cost of renting the property.
A triple-net lease usually gives the tenant control over the selection and hiring of contractors for any maintenance or repairs necessary to the property.
For an investor, a triple-net lease is a great way to limit financial responsibility. But if the lease results in a net loss to the investor, the loss might not be allowed for tax filing because of passive loss limitations.
Kaye Morris has over four years of technical writing experience as a curriculum design specialist and is a published fiction author. She has over 20 years of real estate development experience and received her Bachelor of Science in accounting from McNeese State University along with minors in programming and English.