Understanding Triple Net Lease Agreements

Understanding Triple Net Lease Agreements

Real estate transaction will always be a big deal as long as there is the need for shelter in the society. And it is in your best interest to get to know and understand various aspects of real estate transactions if you have the hopes of getting that dream house of yours or getting a building for your business purposes.

Agreed, it is quite technical even cumbersome and of course, should not be undertaken without the guidance of a lawyer. But it is also important, (wise even) for you as an individual to take a look into the various aspects of real estate transactions so as to be better informed and to understand some available options that might be of benefit to you. One such option is the triple net lease agreements.

What is a Triple Net Lease Agreement?

Simply put, this is a lease agreement that reduces the responsibility and therefore the liability of a landlord over a piece of real property. It is one of the various forms of real estate arrangements that are obtainable in the real estate sector. This arrangement also known as an NNN agreement is quite popular and is getting more popular in the United States of America, you can read more about it here.

The primary implication of this agreement is that the tenant bears the responsibility and the liability of maintaining the building (this involves putting in the necessary structures and repairs necessary for the building). Again, the tenant also pays taxes on the property, the insurance premiums plus the rent for the building. The basic upside to this arrangement is that for all these extra responsibilities, the rent to be paid by the tenant is very much reduced.

Features of Triple Net Lease Agreements

It is important to note that no two NNN agreements are the same and as can be expected in any real estate arrangement, there are more intricacies to them than meets the eye. The primary reason for these differences in triple net lease agreements is because situations differ and the uniqueness of the situation and interests concerned determines the type of lease agreement to be reached. However, there are some basic features that must be present in an NNN deal and they are as follows:

An Agreement as to the Monthly Rental Sum

For most investors or landlords, the profit or gain to be made from this arrangement is from the monthly rental sum. Thus, it is always a factor that has to be present in any such arrangement. You should also be conscious of the rent amount to be negotiated in any such deal as it is your means of recouping your investment on the property.

The Tax Responsibilities

It is important also, that the tax responsibilities be outlined for the parties involved (both the landlord and the tenant) so that in this way, all parties know and understand the terms involved before agreeing to it. Also note that these tax responsibilities are not expected to take any particular form or mode since it is based on the agreement of the parties.

Insurance Premiums and Claims

Again, it is the tenant who is generally responsible for paying the insurance premiums. This is a key feature of NNN deals. However, there usually would be variances from deal to deal thus, just as in tax responsibilities, there might be clauses and specifications as to the extent of the responsibility of the tenant, what is to be done and how it is to be done. The key here also is to ensure that the terms are well understood and agreed to by the parties involved.

Maintenance, Repairs and General Upkeep

A crucial aspect of NNN agreements is that the tenant takes charge of the maintenance, repairs and the general upkeep of the building. However, in this case as in the others, the extent of the responsibility of the tenant should be clearly spelled out. In most cases, minor repairs and other activities for the maintenance of the building is usually attended to by the tenant while major repairs (roofing for example) will be handled by the landlord.

Utilities and Janitorial Costs

These usually will fall in to the general maintenance category and it is expected that the tenant will take care of the cost of doing that. However, this is not so in all cases and this is because, in some cases, the landlord and the tenant will share the cost of this aspect of the maintenance of the property. However, these terms are to be negotiated by the parties involved so as to avoid disputes arising on the issue in the future. You can read more on this at https://www.investopedia.com/ask/answers/040115/what-are-differences-between-single-double-and-triplenet-leases.asp


It is agreed that real estate transactions can be quite technical and difficult for most individuals who are not specialized in that area. This however should not discourage you from taking more than a cursory glance at it especially if you are looking at areas to invest in.

The triple net lease is one form of lease agreement that can be beneficial to both the landlord and the tenant. There are numerous benefits to be enjoyed by all involved.