Net Leases, What’s the Difference

The Differences between a Double Net (NN), Triple Net (NNN) and an Absolute Triple Net (NNN) Leases

To simplify matters, think of it this way: the more net, the less the expense and the less the management for the landlord. Under a “double-netNN lease the landlord is responsible for the structural integrity of the building and the roof. Commonly referred to as “roof and structure” responsibility, this can also include some parking lot responsibility. The tenant is responsible for all maintenance and operating expenses, including real estate taxes and insurance. The landlord may pay some operating expenses directly (e.g. property taxes or insurance) and subsequently be reimbursed by the tenant. Under a “triple-netNNN lease, the tenant is responsible for the roof, structure and all operating expenses including real estate taxes and insurance. The landlord may pay some operating expenses directly and subsequently be reimbursed by the tenant. Under an “absolute triple-net” (also sometimes called a “true triple-net”) NNN lease, for example a Walgreen’s lease, Walgreens is responsible for all expenses related to maintaining the property including the roof and structure, all operating expenses, real estate taxes and insurance. The landlord does not pay any operating expenses directly, and does not need to seek reimbursement from Walgreens. The landlord does not have financial or management responsibilities related to the tenant’s occupancy of the building. The landlord is of course responsible for their own mortgage payments, personal income tax, etc. Please note that each lease will vary and the above are commonly used structures of net leases. Many tenants, landlords, developers, and brokers use slightly different definitions of net-leases. We strongly encourage you to seek legal counsel when reviewing a lease and purchasing a piece of property.