What Are “Triple Net” Leases and Why Are They Popular With Investors?
The “triple” in “triple net” refers to the manner in which three principal cost items are allocated between a landlord and a tenant: (1) property taxes; (2) insurance; and (3) maintenance. A “triple net” lease (sometimes also referred to as a “net lease”) is a lease where the tenant is responsible for paying the cost of all three of these items. This type of lease is popular with investors because the rent collected by the landlord is free and clear of any obligation to pay for these three major cost items. Application to Single-Tenant Buildings. The easiest context for use of a “triple net lease” is a single tenant building such as an industrial property or a retail drug store. Even in the single tenant context, building maintenance is not always a clear issue. Typically, the landlord will accept responsibility for making “structural” repairs. However, the responsibility for repairing and maintaining HVAC, plumbing, electrical, and other building systems is often the subject to intens
