A net lease is a type of lease agreement that is commonly used in a commercia real estate lease. In a lease agreement, the basic element is the base rent, which is the amount of money that the tenant must pay for occupying the real estate, and another important element is the operating and maintenance expenses for the property, such as taxes, insurance, utilities, etc. In the situation which the tenant is responsible for these other expenses, this lease is a net lease.
There are three types of net lease:
- Single net lease, or N lease.
A single net lease means the tenant pays rent plus property taxes.
- Double net lease, or “net-net” lease, or “NN” lease.
A double net lease means the tenant pays rent plus property taxes and insurances.
- Triple net lease, or “net-net-net” lease, or “NNN” lease.
A triple net lease means the tenant pays rent plus property taxes, insurances, common area maintenance charges, and any other charges designated for payment by the tenant such as utilities.
In real life, triple net lease is most common when a single tenant rents all or a large portion of the entire commercial property.
[Last updated in August of 2020 by the Wex Definitions Team]