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Triple Net Lease
The triple net lease is a type of lease that passes on three of the biggest responsibilities associated with a piece of commercial property. With this kind of lease, the tenant agrees to pay for property taxes, property insurance and for maintenance of the property. When you use this kind of lease to rent out your commercial property, you essentially put almost all of the responsibility on the tenant and you simply collect a rent check every month. Triple net leases can have many different terms, but they will include provisions for these three areas.
One of the advantages of using a triple net lease is that you can pass any price increases on to the tenant. For example, if the insurance premium on the property goes up, the tenant will be the one responsible for paying it. If property taxes on the commercial property increase, the tenant will have to deal with it. As the landlord, you get to secure your investment and you will not have to worry about losing any of the profit from the rent along the way.
Although this type
of lease agreement can make things much easier on a landlord, it does come with some risks. If you choose the wrong tenant, it could end up costing you a substantial amount of money. For example, if the tenant did not pay the taxes on the property and disappeared, you would have to pay the taxes or risk losing the property to a tax lien sale. If the tenant damaged the property and did not have adequate insurance coverage, you could have to pay for the damage.
Benefits for Renters
Even though using this type of lease can significantly benefit the owner of the property, it also has some benefits for renters. For example, the rent with this kind of lease tends to be lower than the rent for other types of leases. Because the owner of the property does not have to pay taxes or insurance, he can afford to charge a lower amount. Since renters handle almost every aspect of the property, they typically do not have to worry about much interference from the owner. They can control the property and deal with their business instead of rules and regulations set forth by a property owner.