Lately I’ve been asked to explain what is included in different types of leases.  Below is a simple explanation:

TRIPLE-NET LEASE

With a triple-net lease the company renting the property is responsible for all the extra expenses associated with the property, including utilities, insurance and taxes. The landlord or property owner retains the full lease or rental payment and is not responsible for any other expenses associated with the property. A business with a triple-net lease is also typically responsible for the maintenance and any repairs the property will need during the term of the lease.

GROSS OR FULL SERVICE LEASE

The opposite of a triple net lease is a gross lease or full service. With a gross lease, the property renter writes a single check to the property owner and the owner is responsible for all of the expenses of the building. A gross lease is more common in an office building with a number of tenants. The building may be billed as a whole for utilities, taxes or insurance, making triple-net leases unworkable for the building owner and tenants.

NET LEASE

In a single-net or double-net lease, some of the property expenses will be paid by the building owner and some by the renter. Which expenses go to which side are determined on a property-by-property basis. Which expenses, such as taxes, maintenance or insurance, are the responsibility of the property renter are clearly spelled out in the lease contract. There is no standard formula or contract for single-net commercial leases.

If you would like more information on different types of leases or have a commercial real estate questions, please give me a call.

 

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