DEFINITION of 'Single Net Lease'


A single net lease is a commercial real estate lease agreement in which the tenant agrees to pay property taxes in addition to rent. A single net lease is a form of pass through lease in which taxes associated with the property become the responsibility of the tenant instead of the landlord. The landlord is responsible for the other operating expenses involved with running the property. Single net leases are a less common form of commercial lease.

BREAKING DOWN 'Single Net Lease'


Single net leases are a type of net lease, which refers to a type of lease where the tenant takes on some or all of the operating cost of a building. Single net lease is sometimes confused with the concept of a net lease. Net lease refers to all the types of net leases - single net leases, double net leases and triple net leases – whereas single net leases is specifically the net lease with the tenant only taking on one operating expense, that almost always being the property taxes.

Single Net Lease Versus Other Lease Types

Net leases are the other side of the coin from gross leases. In a gross lease, the tenant pays and agreed upon amount for rent, and the landlord is responsible for everything related to the property. Most rental agreements for non-commercial properties are a gross lease or a modified gross lease where the tenant bears responsibility for personal utilities and nothing else. As for other net leases, double net leases and triple net leases have the tenant paying two and three of the major operating expense categories respectively. The major operating expense categories are taxes, insurance and maintenance.

The Landlord’s Perspective on a Single Net Lease

From a passive investment standpoint, a property investor would prefer a triple net lease as there are no headaches that come with dealing with the property like a traditional landlord. The tenant company may not be interested in carrying all the building costs, so the double and single net leases may be a compromise between the two parties. In addition to shifting the cost burden in a single net lease, the landlord also shifts any negotiation or lobbying with local authorities on commercial property tax rates.

In theory, an absentee property owner with properties in different regions of the country could contract out maintenance, gain economies of scale by insuring across the portfolio and leave local taxation issues with the tenants to sort out. While a single net lease is more work than a triple net lease, it is still superior to a gross lease in terms of the burden it places on the property owner.

  1. Net Lease

    Net lease refers to a provision that requires a tenant to pay ...
  2. Triple Net Lease (NNN)

    A triple net lease assigns sole responsibility to the tenant ...
  3. Double Net Lease

    A double net lease is an agreement in which the tenant is responsible ...
  4. Gross Lease

    A gross lease is a lease in which a flat rent fee encompasses ...
  5. Lease Payments

    Lease payments are tied to the terms of different forms of leasing ...
  6. Capitalized Lease Method

    A capitalized lease method is an accounting approach that posts ...
Related Articles
  1. Managing Wealth

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
  2. Investing

    Buying a House with Tenants: A Quick Guide

    Before buying a house with tenants, know the risks and responsibilities you're taking on.
  3. Retirement

    Retirees: Should You Buy or Lease Your Car?

    To buy or lease – that is the question. For retirees, access to safer cars, comprehensive warranties and tax deductions may drive up leasing's appeal.
  4. Personal Finance

    The Pros and Cons of Leasing a Car

    Consider these pros and cons before deciding whether or not to lease a car.
  5. Personal Finance

    New Wheels: Lease or Buy?

    Buying or leasing a car both have advantages and drawbacks. Find out which is best for you.
  6. Managing Wealth

    4 Ways to Get the Best Deal on a Car Lease

    Car buyers typically negotiate when purchasing a vehicle, but many don't negotiate when leasing a car. There are several ways to save if you ask.
  7. Personal Finance

    3 Questions to Consider When Buying a Car

    When deciding what kind of car to buy, make sure to answer these questions first.
  8. Investing

    How To Rent Out Your Spare Room

    If you have extra space in your house, why not rent it out, especially during the school term, to help pay the mortgage?
  9. Managing Wealth

    4 Things Landlords Aren't Allowed To Do

    Whether you're a landlord or a tenant, you need to know the rules.
  1. 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 types of assets may be considered off balance sheet (OBS)?

    Learn about what types of assets are often accounted for using the off-balance-sheet method and why this accounting technique ... Read Answer >>
  3. What debt/equity ratio is common for companies in the telecommunications sector?

    Learn the average debt-to-equity ratio for the telecommunications sector and how including operating leases can substantially ... Read Answer >>
Hot Definitions
  1. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  5. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  6. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
Trading Center