Definition Of A Triple Net Lease
A triple net lease is also referred to as true net lease. A triple net lease is a commercial leasing option wherein the landlord of the commercial property takes no responsibilities towards maintaining of the building. |
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Here the landlord benefits in terms of finance as the onus of the upkeep falls on the tenant, who has the responsibility of maintaining the property and also ensuring that all improvements are done.
In return for a triple net lease, the tenant has control over the property without having to invest large sums of money on acquiring a new property.
However, this type of lease agreement can, at times, be a risk prospect for the landlord. Sometimes, it can so happen that the tenants do not bother to maintain the property leading to a complete state of disrepair. In some cases, the tenants can deliberately cause damage to the building with the idea of collecting money from the insurance. To combat these risks, usually a reserve fund is established at the time of signing the agreement. The tenant has to make regular payments to this fund, which is then used to cover all expenses related to repairs.
At the same time, the contract agreement has limitations and conditions for the tenant and the landlord. This ensures protection for both parties concerned. For instance, property taxes are to be handled by the landlord.
If you are interested in a triple net lease contract, then you should understand the definition of such a lease. In addition, you should also consult your lawyer as this type of contract is primarily useful for long-term purposes with the minimum rental period often being 50 years.
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