October 11, 2018
It is common in commercial real estate leases for retail, restaurant or office space to see reference to a “Triple Net” or a “NNN” lease. For seasoned developers and brokers this term or acronym is common place but for those who are just starting their business this term may be confusing. What does it mean?
Triple net refers to three specific costs that are borne by the landlord/lessor that are passed directly on to the tenant/lessee in addition to the base rent. The costs are: property taxes, insurance, and maintenance (often referred to as “CAM” or common area maintenance (for more information see additional blog post)). It is important for the Tenant to review these provisions of the Lease carefully. The NNN provisions are placed in a lease to protect the Landlord. That is, it provides the Landlord the ability to pass along these costs directly to the Tenant including any increases during the term. The Tenant should recognize the fact that these costs will increase naturally over the term, but that without limitations in the lease, the Landlord may increase costs (especially maintenance) without discretion or input on the part of the Tenant. Please read your lease carefully. I recommend that any lease should be reviewed by competent counsel.