What is a "triple net lease" in the context of commercial real estate?

A triple net lease is a type of commercial lease agreement where the tenant is responsible for covering three specific costs in addition to the rent: property taxes, insurance, and maintenance costs associated with the property. This arrangement benefits landlords, as they can pass the operational expenses of the property onto the tenant, providing a more predictable income stream without the additional burden of managing these expenses themselves.

Under a triple net lease, the tenant is often responsible for not only paying the base rent but also for directly handling the costs associated with owning and managing the property. This can include various maintenance responsibilities that ensure the property is kept in good condition and complies with local regulations.

This structure contrasts with other lease types where the landlord may take on these financial responsibilities or share them with the tenant. Understanding the intricacies of lease agreements like the triple net lease is crucial for both landlords and tenants in navigating commercial real estate transactions effectively.