The Triple Net Lease is commonly used in commercial real estate transactions. The NNN Lease can be used for industrial properties or warehouse properties, leased office space and retail leased space. Even though a triple net lease is a common base it is still misunderstood by potential tenants clients.

What is a net, net, net commercial lease or a Triple Net Lease. A triple net lease is a Landlord’s Lease or a Triple Net Lease. Essentially is a lease in which all the costs of the property or the portion of the property leased by the Commercial Tenant. The Landlord’s Lease contains the financial obligation of the Commercial Tenant. For example, the Gross Rent is the total Rent to be charged on a monthly basis. The Tenant is responsible for the

the tenant is responsible for the base rent monthly rent and additional costs as noted below.

Under the Landlord’s Lease of a NNN Lease

The Tenant is responsible for the  Monthly Net Base Rent Annual

In addition to the Base Rent, there are Additional Rents due

Real taxes apportioned on a monthly basis

Repairs and maintenance of the property

Management Fees

Landscaping

Snow Removal (if applicable )

The Landlord should provide an annual report reflecting the costs less the provision paid by the Tenant any funds owing will have to be paid or adjusted to the Landlord as outlined in the Lease Agreement.

Triple Net Lease does have investment Risks

A common misunderstanding is that all the cost are the burden of the Tenant. Therefore the return on a commercial property is risk-free. The NNN Lease does provide a steady income stream almost one could call it an annuity. However, if the Tenant can no longer honour the Lease due a bankruptcy the Landlord will be incurring all the costs and not receiving any base rent as long as the property is vacant. As well Commission will be another cost to a Real Estate Brokerage once the property is released

Drafted by Allen Mayer, Broker Direct Line 416 918 7979

 

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