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In the "Net" of Commercial Leasing: A Quick Guide to Triple Net and Other Tenant Responsibilities in a Commercial Lease

Triple Net Leases

A triple net lease obligates a tenant to pay additional expenses not paid in other types of leases. These expenses are real estate taxes, insurance and common area maintenance ("CAM"), in addition to rent and utilities.

NNN leases are commonly used in multi-tenant properties (i.e., shopping malls). Single net and double net are more prevalent in single-tenant properties.

1. CAM: may include landscaping, snow removal, various repairs, trash removal, replacement of all parking areas, among other maintenance.

CAM is based on a tenant's proportionate share of expenses.

2. Real Estate Taxes: Tenants will pay their proportionate shares of taxes and assessments based on a tenant's floor area (for example, a tenant is part of a shopping center owned by landlord).

These taxes are based on the assessed value of the property which can increase if there is a sale or there are significant improvements made to the property.

3. Insurance: a tenant will usually be required to maintain at all times commercial comprehensive or general liability insurance, workers' compensation and may also be required to maintain plate glass (insurance to cover full replacement of all plate glass); equipment insurance; personal property and improvements: and business interruption insurance.

A triple net lease may have a lower rent rate because the tenant assumes expense that would otherwise be paid by the landlord.

The Other Two "Nets"

Double net

In a double net lease, tenants pay property taxes and insurance.

Single Net

A single net lease requires that the commercial tenant pays property taxes. This type of lease is found less frequently than a triple or even double net lease.

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