What are the cash flow responsibilities of a tenant in a triple net lease?

In a triple net lease, the tenant has specific cash flow responsibilities that extend beyond merely paying rent. This type of lease typically requires the tenant to pay not only the rent but also three additional key expenses: property taxes, insurance, and maintenance costs.

The rationale behind this arrangement is that the landlord transfers many of the operational financial burdens associated with the property to the tenant. As a result, in a triple net lease, the tenant assumes responsibility for these costs, allowing the landlord to receive a more predictable cash flow while minimizing their involvement in the property's day-to-day financial management.

By paying these costs, the tenant effectively contributes to the overall financial health of the property, which can also impact the property's valuation over time. Understanding the full scope of a triple net lease is crucial for both landlords and tenants as it significantly alters the financial dynamics of the leasing arrangement.