Types of Commercial Net Leases

Lease agreement contract sheet and brown pen

You are finally ready to start your own business. One of your most important requirements will be business premises. Commercial leases have a stark difference to residential rentals. You might feel overwhelmed by the different choices and obligations of a commercial contract.

The first thing before evaluating your lease is to hire property solicitors based in Townsville. These experts will help you understand your lease terms well before signing the agreement to avoid costly legal disputes. There are two primary commercial leases; gross and net leases.

A gross lease constitutes a higher rent from which the landlord pays the building’s expenses. Net leases have a lower rent, but the tenant pays the building’s costs. Here are the common forms of net commercial leases.

Single Net Lease

This is also known as the N lease. Under this lease agreement, the tenant pays the base rent plus property taxes of the rental space. The tenant also pays for janitorial and utility services while the landlord covers other expenses.

Double Net Leases

Referred to as NN leases, the renter pays the base rent, property insurance and property taxes. The tenant also pays for janitorial and utility services. The property owner covers maintenance of common areas and structural repairs.

Triple Net Leases

Also called NNN lease, these are the most common commercial net leases. In addition to a set monthly rent, the tenant pays for property taxes, insurance and maintenance of the common areas. Triple N leaseholders pay the least amount of rent among the three categories of net commercial leaseholders.

In bondable net leases, a renter pays for all building expenses plus rent and has absolute responsibility for the property. The renter also bears all imaginable real estate risks. Single net leases are more favourable for start-ups as the payments are pre-determined.

As property taxes and insurance fluctuate, double and triple leases might be costly even with low base rents.

Threesome