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What is a Commercial Property Net Lease?

by | Jul 8, 2024 | Small Business |

You started a business, and now need to lease office, manufacturing, or warehouse space. You’ve heard different terms thrown around, but aren’t quite sure what they all mean. At rb LEGAL, we’re here to help negotiate commercial leases, and explain the benefits and drawbacks of each option.

Net leases are common in commercial real estate because they define how operating expenses are divided between the landlord and tenant. Net leases come in three main varieties, each with a unique breakdown of financial responsibilities. Understanding these differences is key when entering into a commercial lease agreement.

Single Net Lease

With a Single Net (or NN) lease, the tenant pays the base rent plus a portion of the property tax. The landlord covers the rest – including building insurance and maintenance costs. Because the landlord covers most expenses, a Single Net lease is relatively tenant-friendly, and not as common as its cousins.

Double Net Lease

In a Double Net (or NN) lease, the tenant covers the property taxes and insurance premiums, while the landlord typically handles maintenance expenses. Double Net leases are more common than Single Net, since they usually offer a more balanced split of costs between landlords and tenants.

Triple Net Lease

The Triple Net (or NNN) lease is where the tenant takes on the most responsibility in regards to costs. They pay the base rent plus property taxes, insurance, and maintenance. This can include anything from structural and HVAC repairs, to landscaping costs, to snow removal.

Net leases offer a wide degree of flexibility and customization, but each option comes with its own set of complexities. If you have questions about commercial leases, give rb LEGAL a text or call today at (763) 582-1414, or drop us an email at [email protected]