Triple net lease (NNN) is normally a commercial lease where the lessee pays rent and utilities as well as three other types of property expenses: insurance, maintenance, and taxes. Triple net leases are very popular for investors because they have less financial and managerial responsibilities over the property, and they have less risk because the lessee covers much of any cost fluctuations, incentivizing the lessee to keep up the property. Further, the lessees benefit from triple net leases because their rent typically is less, and they generally are able to renovate or alter the property more than in a regular lease. On the downside, a lessee would have to cover unforeseen maintenance costs and tax increases unless the lessee and lenders agree to a cap on the amount the lessee would be responsible for. Given their commercial and unique characteristics, triple net leases generally are long-term with the most common lengths being 10 or 15 years but can last much longer.
[Last updated in September of 2021 by the Wex Definitions Team]