A commercial lease is vastly more complex than a residential lease. There are many details that need to be considered, both by the property owner and by the business owner or corporate entity that will be leasing that real estate.
One thing to begin with is the structure of the lease itself. It is very common for commercial leases to be triple net leases, which are also referred to as NNN leases. What do the nets signify, and why are they so critical?
Covering specific costs
Essentially, the nets are going to break down the costs of that commercial property and assign responsibility for those payments. Neither party should assume that the other is responsible, but it all needs to be clearly laid out in the commercial lease.
With a triple net lease, the tenant agrees to pay the monthly rent, the maintenance costs, the utilities for the space, the necessary building insurance and all of the real estate taxes at the end of the year. Of course, specific leases could be written to remove some of these costs or add additional ones, but these are the main areas generally covered by an NNN.
One of the benefits for a tenant is that they might receive a lower monthly rent payment than they would otherwise. The property owner knows that the tenant is going to cover almost all of the costs associated with that property. With a different type of leasing structure, where the owner still has to pay taxes or upkeep costs, they may raise the rent to account for it.
It is crucial to understand exactly what is written in a commercial lease when signing it or when facing a dispute. All parties involved must be well aware of their legal options.