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What is NNN in a Lease Agreement?

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Rent Agreement
1 2024-03-21T13:44:46+00:00
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I came to know about the NNN lease meaning when I was researching different kinds of commercial lease agreements. There are many kinds of lease agreements. One of them is NNN or a triple net lease. A triple net lease, commonly referred to as a Net Net Net lease (NNN), is a type of commercial lease in which the tenant is responsible for paying all additional costs in addition to the rent, on a proportionate basis. A lease of this kind is more advantageous to the landlord. As a result, a renter should carefully read a NNN lease before signing it and bargain hard to increase the annual rent sum. The ability of the tenant to have a reasonable understanding of the operating expenses incurred is one of the main advantages of a NNN lease. Furthermore, the renter rather than the landlord benefits from the cost reductions.

What is NNN in a lease agreement?

A triple net lease demands a tenant to pay the main expenses of the property from paying rent and utility bills. These expenses include;
  • Property tax
  • Insurance
  • Maintenance.

What are the Benefits of Triple Net Leases?

  • Longer Tenure: These leases typically have a ten-year term, though the tenant may choose to extend it.
  • Escalators for Rent: Rent increases under triple net leases are built-in and are somewhat low. These built-in increments are referred to as "escalators."
  • Transfer of Landlord’s Cost: You don't have to worry about increased property taxes because the tenant will take care of it and it won't affect your cash flow.
  • Decreased Vacancy Risk: Triple net leases are long-term leases, therefore there won't be any issues with vacancy or re-leasing.
  • Reduced Rent for Tenants: Triple net leases benefit the tenant and are less expensive than gross leases.
  • Reasonable Escalation for Tenants: In comparison to other leases, triple net leases provide lower initial rentals as well as substantially lower escalation when measured against the annual growth in commercial market rental rates.
This is NNN lease meaning and benefits. Get Your Rent Agreement Drafted and Delivered to Your Doorstep With NoBroker Rent Agreement Service. Read More: What is Lock in Period in Rent Agreement?

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