Commercial Net Leases
Unlink a gross lease, in a commercial net lease, the tenants are responsible for paying for some of the operating costs of the building. The most common operating costs include:
- Property Taxes - Tenants must pay their portion of property taxes, usually based on how much of the rentable space (or of the entire property) they are leasing.
- Insurance - Similarly, liability, property and casualty insurance will be allocated amongst the tenants and landlord.
- Maintenance - Maintenance costs will usually be negotiated heavily, with landlords wanting to "pass through" all costs to the tenants, while tenants want to get as many "exclusions" as possible.
When all three of these expenses are included in a net lease, it is referred to as a "triple net lease". Negotiating the terms of these leases is tricky, and you'll want to know all of your options to help minimize your liability for expenses.