What Is A Net Lease Agreement

A type of commercial real estate lease where you typically pay the base rent plus two utilities – for example, property taxes and insurance. All other costs are the responsibility of the owner. Net leases are like owning real estate without actually having legal title to it. These are landlord-tenant leases in which the tenant pays the rent and all other costs associated with the property in question. The agreement may include one or more expenses, including insurance, property taxes, utilities, maintenance and repairs, and other operating costs. Most landlords typically accept lower rent payments due to the additional costs associated with net leases. The definition of what constitutes a net lease is quite broad and far from uniform across the country. Instead, net leases are divided into three main types that deal with the main cost categories of taxes, maintenance, and insurance fees – in addition to the rent charged by the landlord. They are: In a net lease, one or more of these expenses are borne by the tenant. A single net lease means that the tenant is responsible for property taxes. A double net lease requires the tenant to pay taxes and insurance.

And a triple net lease weighs on the tenant with all three. A net lease can be classified into many different types of leases, but they are usually structured to cover the categories of insurance, maintenance and tax costs. They can be structured as follows: A “net lease” is a type of lease between the landlord and tenant, in which the tenant is responsible for both paying the rent and most, if not all, of the cost of the real estate. The most common net lease is a “triple net lease,” where the tenant pays the “net” rent for all expenses of a property, namely (1) property taxes, (2) insurance, and (3) maintenance. Landlords receive the constant rental income paid by the tenant without the responsibility for property management expenses, which can change over time. In addition, net leases typically have an initial long term of 10 years or more, which provides predictability to the owner. .