Legal Definitions - net lease

A net lease is a type of lease agreement commonly used in commercial real estate. It is an agreement between a landlord and a tenant where the tenant is responsible for paying not only the base rent but also other expenses related to the property, such as taxes, insurance, and utilities.

There are three types of net lease:

• Single net lease (N lease): The tenant pays rent plus property taxes.
• Double net lease (net-net lease or NN lease): The tenant pays rent plus property taxes and insurance.
• Triple net lease (net-net-net lease or NNN lease): The tenant pays rent plus property taxes, insurance, common area maintenance charges, and any other charges designated for payment by the tenant such as utilities.

The most common type of net lease is the triple net lease, which is used when a single tenant rents all or a large portion of the entire commercial property.

For example, let's say a business owner wants to lease a commercial property to open a retail store. The landlord offers a triple net lease, which means the business owner will be responsible for paying not only the base rent but also property taxes, insurance, and maintenance charges for the common areas of the property. This type of lease is common in commercial real estate because it allows the landlord to transfer some of the expenses of owning the property to the tenant.