Triple net (NNN) leases: tenant pays base rent, property taxes, insurance, and maintenance. Learn NNN expenses, red flags, and the 126 fields to abstract.
A Triple Net Lease requires the tenant to pay base rent plus all three "nets": property taxes, building insurance, and maintenance/operating expenses. The landlord receives a passive income stream with minimal management obligations. NNN leases are the dominant structure for single-tenant retail, fast-food, pharmacy, and automotive properties nationwide.
Typical Industries
Typical Term Length
10–25 years
Pros
Cons
Pros
Cons
These are the highest-priority fields Lextract extracts from NNN leases. Click any field to learn what it means and why it matters.
Lextract automatically detects these red flags in NNN leases. Click any flag to learn the impact and what to do.
Triple net means the tenant pays three categories of expenses in addition to base rent: property taxes, building insurance, and maintenance/operating costs. Each of these is one "net," so three nets equals NNN. The landlord receives net rent after all operating costs have been absorbed by the tenant.
NNN leases can be favorable for tenants who want control over their space and can negotiate a lower base rent in exchange for taking on expense risk. However, tenants must carefully underwrite estimated operating expenses and negotiate caps on controllable costs. The risk is that taxes, insurance, and maintenance costs rise unexpectedly over a 10–20 year term.
In a standard NNN lease, some structural repairs (like major roof replacement or foundation work) may still be the landlord's responsibility depending on how the lease is drafted. In an absolute net or "bondable" net lease, the tenant is responsible for 100% of all expenses including structural, with zero landlord obligations. Absolute net is the more extreme form.
In a triple net lease, the tenant pays property taxes directly or reimburses the landlord for the tenant's pro-rata share. Property taxes are one of the three "nets" — alongside building insurance and maintenance — that distinguish a NNN lease from a gross lease. Tax provisions vary by lease: some require the tenant to pay taxes directly to the taxing authority; others bill the tenant's pro-rata share through a monthly escrow with annual reconciliation.
NNN charges include property taxes, building insurance premiums, and all maintenance and operating costs for the property. In practice, "NNN charges" is often used interchangeably with CAM charges in multi-tenant properties, though in single-tenant NNN leases the tenant may pay these costs directly rather than through a landlord-administered pool. Key items include HVAC maintenance, roof repairs, parking lot upkeep, landscaping, snow removal, utilities for common areas, and property management fees.
When reviewing a NNN lease, focus on five areas: (1) The expense definition section — confirm which expenses are included and excluded from the tenant's obligation; (2) The rent escalation schedule — verify whether annual increases are fixed percentage, CPI-based, or fair market rent resets; (3) CAM provisions — look for annual caps, exclusions, and audit rights; (4) The roof, structure, and HVAC sections — identify which party bears capital replacement costs; (5) Options — confirm renewal option terms, notice periods, and pricing mechanisms. A full NNN lease abstraction surfaces all these fields in a structured format.
The highest-risk NNN lease provisions include: uncapped CAM charges (no limit on annual expense increases), missing tenant audit rights (no ability to verify reconciliation accuracy), capital expenditure pass-throughs classified as maintenance, short dispute windows for reconciliation objections, and absolute net clauses that transfer structural repair obligations entirely to the tenant. Lextract automatically detects these and 15 additional red flag patterns in every NNN lease extraction.
Lextract extracts all 126 fields from NNN leases including base rent, rent escalation schedule, operating expense pass-through definitions, CAM caps, property tax provisions, insurance requirements, renewal options, and termination rights. Red flag detection automatically flags missing CAM caps, absent audit rights, and missing renewal or termination options.
A triple net lease (NNN) requires tenants to pay base rent plus property taxes, insurance, and maintenance. Learn how NNN leases work, what's included, and how they compare to gross leases.
A NNN lease quotes base rent, but your actual monthly payment is typically 25–40% higher. Learn to calculate total occupancy cost — base rent + CAM + taxes + insurance — with worked examples.
A 12-item checklist for tenants reviewing triple-net leases, covering base rent, tax responsibility, HVAC, CAM definitions, and termination rights.
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