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.