Do you know the difference between single, double, and triple net leases? If the answer is no, then this article is for you. Read on to learn what you need to know about single, double, and triple net leases directly from an experienced Florida Real Estate Lawyer.
The Basics – What is a Net Lease?
The term “net lease” describes a type of lease agreement that requires the tenant to pay the property expenses – which are usually paid by the landlord – in addition to rent. Net leases are more common in the world of commercial real estate.
Net leases in Florida generally include maintenance costs, property insurance fees, or property taxes. In a net lease, the tenant pays these fees as if they were the landlord, without actually owning the property. Obviously, that sounds like a terrible deal; however, the tenant also obtains certain benefits, such as lower rent.
Single, Double, and Triple Net Leases
There are three different types of net leases: single, double, and triple net leases. They involve the three main categories of property costs, which are maintenance, taxes, and insurance fees.
A single net lease is an agreement where the tenant pays only one of the three property expenses the landlord would normally pay, in addition to rent. Usually, the tenant is responsible for the property taxes. This type of lease is a form of pass-through lease in which the property taxes become the responsibility of the tenant. Under a single net lease, however, the landlord is still responsible for the remaining two categories of property expenses: maintenance and insurance.
Most non-commercial rental agreements are gross leases, under which the tenant is only responsible for personal utilities.
A double net lease is an agreement where the tenant pays two of the three property expenses, in addition to rent. Usually, in a double net lease, the tenant pays the property insurance fees and the property taxes. Under this type of net lease, however, the landlord is still responsible for property maintenance expenses. When a tenant enters into this type of net lease agreement, they typically have to pay the base rent and the additional payments every month.
Because the tenant is responsible for two categories of property expenses, the total rent payment is often considerably reduced.
Finally, a triple net lease is a lease agreement where the tenant is responsible for all three categories of property expenses in addition to the rent. This type of net lease agreement is usually extensive, long-term, and the landlord usually has very few responsibilities. Under a triple net lease, the tenant pays the property taxes, the property maintenance fees, and the property insurance fees. Although this type of net lease agreement undoubtedly favors the landlord, triple net leases are offered most commonly for prime-real estate locations, and tenants often have no choice but to enter into a triple net lease if they are seeking a specific location.
Are You Entering Into a Net Lease? Work with an Attorney
If you are entering into any of these three types of net leases, it is recommended to have an attorney review the agreement to make sure you are getting a favorable deal and that all parties involved know exactly which fees the tenant is responsible for, and which fees the landlord is responsible for. This will help avoid headaches down the road.