In a triple net lease (NNN), the landlord is primarily responsible for structural repairs, while the tenant handles all other property expenses including real estate taxes, building insurance, maintenance, and common area maintenance. The landlord’s main responsibilities include ensuring the building’s structural integrity and paying for any structural repairs, like roof or foundation issues. The tenant then reimburses the landlord for all other property-related costs through additional rent payments.
Elaboration:
Landlord’s Responsibilities:
Structural Repairs: Landlords typically bear the responsibility for major structural repairs, such as issues with the building’s foundation, exterior walls, roof, plumbing, and electrical components.
Ensuring Property Condition: Landlords must maintain the overall property’s structural condition and ensure compliance with relevant regulations.
Insurance: Landlords may also be responsible for obtaining and maintaining insurance policies that cover the building, such as property insurance, liability insurance, and casualty insurance.
Tenant’s Responsibilities (NNN Lease):
All Property Expenses: The tenant is responsible for all property expenses, including real estate taxes, building insurance, maintenance (including common area maintenance), and any other operating costs.
Additional Rent: Tenants pay a base rent, and then reimburse the landlord for the expenses listed above through additional rent payments, effectively covering the costs of property operations.
Key Considerations:
Negotiated Agreement: The specific details of who is responsible for what costs in a triple net lease can vary and are often negotiated within the lease agreement.
Lower Base Rent: Landlords may offer lower base rents in NNN leases because the tenant assumes most of the operating costs.
Financial Considerations: The tenant in an NNN lease bears the responsibility of managing and paying for all property expenses, including property taxes, insurance, and maintenance.
