Triple Net aka NNN Leases, Modified Gross Leases and Full Service Gross Leases
Triple Threat Net, aka NNN
No this type of lease should not be threatening! Once your understand the basics of a triple net lease, you’ll come to understand that it is a model that makes sense in many types of commercial real estate leases.
Triple net leases, also known as NNN leases, are the most common type of commercial lease. In a Triple Net Lease, the tenant is responsible for paying all of the operating expenses associated with the property they are leasing. This includes property taxes, insurance, and repairs and maintenance.
While this may sound like a lot of responsibility, NNN leases often have lower monthly rental rates than other types of leases. This is because the landlord knows they will not have to pay any of the operating expenses associated with the property. So, if you are looking for a lower monthly rental rate, a NNN lease may be right for you.
Just remember, with a NNN lease, you will be responsible for all of the operating expenses associated with the property. So make sure you are prepared to take on that responsibility before signing an NNN lease.
Modified Gross Leases
A modified gross lease is a type of commercial lease agreement in which the base rent is set without including the cost of property taxes, insurance, or common area maintenance (CAM) charges. The tenant is typically responsible for paying these additional costs in addition to the agreed-upon base rent. This type of lease agreement can be beneficial for both the landlord and tenant as it allows for a more predictable monthly cost for the tenant, while also giving the landlord the potential to increase their profits by pass-through expenses.
However, it is important to carefully review a modified gross lease agreement as the tenant may be responsible for a significant amount of additional costs that could increase their monthly expenses. Landlords should also be aware that they may be responsible for some of the pass-through expenses if they are not specified in the lease agreement.
Both landlords and tenants should consult with an experienced real estate attorney to ensure that their rights and responsibilities are fully protected under a modified gross lease agreement.
Full Service Lease
A Full Service Gross lease is a lease agreement where the landlord agrees to provide all necessary services and amenities for the tenant's use. This includes things like utilities, janitorial services, and maintenance. The tenant is responsible for paying a monthly fee that covers these costs, as well as any other agreed-upon expenses. This type of lease is often used for office or retail space. It is important to have a clear understanding of what is included in the monthly fee before signing a Full Service Gross lease agreement.
