Out of many types of leases used today, triple net lease is one of the most common type used by commercial organizations. Under triple net lease, the lessee agrees to pay, in addition to rent, maintenance, insurance and taxes of the property. There are several advantages and drawbacks of a triple net lease. Hence, an individual, before signing for such lease, should consider the options carefully and come to a conclusion accordingly. The length is usually decided by both the parties involved. However, on an average, it lasts for about 50 years.
Other types of lease that people take are also common in today’s scenario. Under gross lease, the lessee is not responsible to pay any other payment except for the rent. All other expenses are paid by the owner. However, this kind of lease is more common with residential properties. In a double rent lease, some costs are paid by the owner, while other costs are taken care of by the lessee, which seems to be a reasonable deal.
Most landlords of the commercial buildings prefer giving it on triple net lease as the landlords are not liable to pay any kind of expenses. Besides, when a property is given to the lessee on this kind of rent, they take care of the property and maintain it properly as they will have to bear the expenses if not maintained properly. This is also beneficial for the tenant as well, as it gives a sense of ownership at a low capital investment.
However, the landlord is at risk while giving the property on this kind of lease. The tenant may not take proper care of the property, which may cause the building to depreciate in value quickly. Also, the tenant may purposely damage the property in order to get the insurance money. For this reason, the landlord may ask the occupier to pay towards a reserve fund regularly. This money would then be used by the landlord for repairs and during emergency.
The terms of a triple net lease can be modified and finalized by both the parties. In some cases, the landlord might cap the maximum amount of taxes to be paid by the tenant. If the amount of taxes rises above a level, the landlord would make additional payments. Similarly, many other clauses might be modified to benefit both the parties.
If you are planning to take a property on this lease, understand thoroughly what is triple rent lease before signing the agreement. The clauses of this type of rent are very tricky. Hence, it is better to consult a lawyer and fix the clauses in his presence. However, if you are planning to take a commercial property, there are very thin chances that you can opt for other types of lease like double net or gross lease. Triple net lease is a synonym for commercial lease.