Triple Net Lease

What is a 'Triple Net Lease'

A lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.

This type of lease can also be referred to as a "net-net-net lease" or a "hell or high water lease".

BREAKING DOWN 'Triple Net Lease'

For example, if a property owner leases out a building to a business using a triple net lease, the tenant will be responsible for paying the building's property taxes, building insurance and the cost of any maintenance or repairs the building may require during the term of the lease. Because the tenant is covering these costs (which would otherwise be the responsibility of the property owner), the rent charged in the triple net lease is generally lower than the rent charged in a standard lease agreement.

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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. Why might a bond agreement limit the amount of assets that the firm can lease?

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  5. How does the value of the real estate impact the value of a triple net (NNN) lease?

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

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