Commercial Leasing – What Does “Triple Net” Mean?

There are many different forms of commercial leases that are used in the business community.  One of the most common forms is called a “triple net lease” or “net, net, net”.  A triple net lease generally means that the Tenant will be responsible for paying some amount of fixed rent plus an additional amount to cover expenses incurred by the Landlord including maintenance costs, insurance covering the building, taxes, utilities, and other similar out of pocket expenses the Landlord pays for the property.  Additional amounts can be included in the definition of triple net expenses, often called “operating costs”, including depreciation of the building occupied by the Tenant as well as management fees.

Frequently, a triple net lease will require the Landlord to estimate the amount of the Tenant’s share of the triple net costs and the Tenant will pay 1/12 of the estimated amount each month at the same time that the fixed rent is paid.  At the end of the year, when the actual costs are known, the Landlord and Tenant will often complete a reconciliation whereby any overpayments by the Tenant are refunded or shortages in the payments made by the Tenant are made up.

If you have any questions about this or any other leasing matter, please do not hesitate to contact Una Gabie at gabie@pushormitchell.com.