What is a 'Net Lease'

A provision that requires the tenant to pay a portion or all of the taxes, fees and maintenance costs for the property in addition to rent. Net lease requirements are most commonly used with commercial real estate. There are three primary types of net leases: single (net), double (net-net) and triple (net-net-net).


Also referred to as a closed-end lease.

BREAKING DOWN 'Net Lease'

Property owners use net leases in order to shift the burden of managing taxes, insurance and fees to the tenant, and may charge less rent as a result. Though potential tenants may not have to pay as much rent they are still required to pay taxes and fees regardless of how well their business performs, making this an added risk.

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

    Learn the ins and outs of net lease agreements, including the key differences between single net, double net and triple net ... Read Answer >>
  2. What kinds of real estate transactions use triple net (NNN) leases?

    Learn how a net-net-net or triple net lease works and why it is popular in commercial real estate transactions. It is also ... Read Answer >>
  3. What are the three "nets" of an NNN lease?

    Learn what the three "nets" are in an NNN lease and how they affect the responsibilities of both landlord and tenant in a ... Read Answer >>
  4. How does the value of the real estate impact the value of a triple net (NNN) lease?

    Understand how the value of the real estate involved in a triple-net lease impacts the value of the lease both positively ... Read Answer >>
  5. Why might a bond agreement limit the amount of assets that the firm can lease?

    Bond covenants can limit the amount of leases a company can have because leasing contracts are a form of debt. Taking on ... Read Answer >>
  6. How have low interest rates affected lease rates in the automotive sector?

    Find out how and why lower interest rates for leasing new automobiles have helped spur more consumers to lease cars instead ... Read Answer >>
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