DEFINITION of 'Double Net Lease'

An agreement in which the tenant is responsible for both property taxes and premiums for insuring the building. Unlike a single net lease, which only requires the tenant to pay property taxes, a double net lease passes more expenses along in the form of insurance payments. The landlord is still held responsible for structural maintenance expenses. Each month, the landlord receives the base rent plus the additional payments. Double net leases are most commonly found in commercial real estate.

BREAKING DOWN 'Double Net Lease'

For commercial properties with multiple tenants, such as a shopping mall, taxes and insurance fees may be assigned to the individual tenants on a proportional basis. Even if property taxes and building insurance premiums are considered the responsibility of the tenant, owners of commercial property should have property taxes passed through themselves in order to ensure that they are aware of payment issues.

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RELATED FAQS
  1. What are the differences between single, double and triple-net leases?

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  2. What are the three "nets" of an NNN lease?

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  3. What kinds of real estate transactions use triple net (NNN) leases?

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    Understand how the value of the real estate involved in a triple-net lease impacts the value of the lease both positively ... Read Answer >>
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