In a commercial real estate, a net lease requires the tenant to pay, “addition rent” also called “pass throughs” of some or all of the property expenses that normally would be paid by the property owner. (known as the "landlord" or "lessor").
The precise expenses that are passed through to the tenant are usually specified in a written lease are generally pro-rated among the tenants based on the square footage of the area occupied by each tenant. The term "net lease" is distinguished from the term "gross lease". In a net lease, the property owner receives the rent "net" after the expenses that are to be passed through to tenants are paid. In a gross lease, the tenant pays a gross amount of rent, which the landlord can use to pay expenses or in any other way as the landlord sees fit.
In a single net lease tenant is responsible for paying property taxes. In a double net lease (Net-Net or NN), tenant is responsible for property tax and building insurance. A triple net lease (Net-Net-Net or NNN) the tenant pays all real estate taxes, building insurance, and maintenance (the three "Nets") in addition to any normal fees that are expected under the agreement (rent, utilities, etc.).
Jun 16, 2014