Triple Net (NNN) Commercial Lease Agreement Template

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The triple net (NNN) commercial lease agreement is a real estate contract for non-residential property between landlords and a business tenant. The term triple-net refers to the landlord covering most of the expenses on the property, and that the monthly rent includes all fees related to property taxes, insurance, and common area maintenance (CAM’s) on the property. The tenant is only responsible for the utility and services on the property such as electricity, water, internet, etc.

This type of lease usually longer term than a residential lease, and therefore is recommended that the parties sign the agreement in the presence of a notary public.

What is a Triple Net Lease?

A Triple Net Lease is a commercial property rental agreement in which the tenant is made responsible for rent, utilities and all other associated costs.

This can be an attractive, hands-off arrangement for the building owner, who may be able to collect revenue on the property without having to worry about upkeep and administration.

Triple Net Lease Definition

In a standard commercial lease, the tenant pays for just rent and utilities. A Triple Net Lease is different. With this alternative, the renter is responsible for the normal rent and utilities, but also for the other associated building costs, including insurance, maintenance, and taxes. These added costs together represent the three (or “triple”) nets.

Triple Net Lease Pros and Cons

In the best case, a Triple Net Lease provides the building owner with all the upsides of property investment, without the headaches and financial hassles of having to deal with maintenance, insurance, and taxes.

It can be a win-win for the tenant too: Triple Net Lease rents are usually lower, to compensate for the added financial burdens of the three nets, and the lease terms are often quite long – a potential perk for a tenant who is planning on sticking around. Also, a business-minded tenant might be able to economize on building maintenance and insurance.

Of course, there are potential downsides. The owner cedes some control to the tenant, and so must rely on the tenant’s good faith in covering the three “nets.” An irresponsible tenant who shirks insurance responsibility or neglects maintenance could leave the owner in a bind.

For the tenant, a Triple Net Lease means forgoing some convenience. One of the upsides of renting is that it spares the hassle of dealing with ancillary responsibilities and costs, which the tenant must shoulder in a Triple Net agreement.

Net vs Triple Net Lease

As an alternative to the Triple Net Lease, a tenant may agree to cover just some of these ancillary costs. In a Net Lease, the tenant pays for the standard rent and utilities, plus one of the three “nets” – either insurance, maintenance or taxes. Similarly, a Double Net lease sees the tenant responsible for two of these three.

A Single or Double Net Leases might be a good compromise solution for a tenant who does not want to take full responsibility for all building costs.