Triple Net Lease Agreement
A triple net lease agreement is very popular when it comes to leasing of a commercial property. The reason for this is simple. |
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The property owner does not have to take time out and spend money on maintaining the state of the building. It is the tenant who has the responsibility of paying not just a nominal rent, but also bearing all the expenses related to taxes, insurance, and maintenance.
Triple net lease, also known as net-net-net lease, ensures that the tenant takes on full expenses for operating costs as well as fixed costs. If you are planning on signing a triple net lease agreement, it is best to check the lease agreement twice. If possible, ask your lawyer to go through it. Usually the agreement is made on long-term basis; sometimes it is for a minimum period of 50 years.
In addition, the agreement should have very strict terms and conditions for both the tenant and the landlord. This way, there will be no ambiguity later on as is the case when it comes to undertaking repairs where both parties believe it is not their responsibility. Make sure that your agreement has a cap on the property tax that you will be paying. In other words, if the tax rises above a certain amount, then the amount above the cap should be paid by the landlord. You can also add a clause to protect you as a tenant from unexpected maintenance or increased cost of insurance.
A triple net lease can be a win-win situation for the tenant and the landlord provided the terms and conditions are fair to both parties.
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