Triple net lease

Triple net lease CRE

Triple net lease is a version of a CRE lease agreement.

In this particular arrangement between tenant and landlord (property owner), the tenant (lessee) agrees to pay all operating and property expenses on top of the rental. Such expenses will include assessment rates, insurance, repairs and maintenance, utilities, pest control, security etc.

(I.e. the tenant will pay, directly, those expenses normally included in gross rental, and those expenses normally included in net rental)

In the “low admin’ triple net lease arrangement, the landlord or owner only has to worry about “one cheque a month”. All related property management overhead is handled by the tenant.

The downside risk is that the tenant may not honour her responsibilities. As a result, there is risk the property is either poorly maintained or breaches payment obligations to service providers and/or authorities. Meaning, at the end of the lease, the property owner may have problems and unpaid costs to deal with.

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