| A triple net lease designates the tenant or lessee | | | | regards to leaving the insurance of their building to |
| as being solely responsible for bearing all the costs | | | | the tenant. The tenant may willfully damage the |
| related to the asset being leased. The landlord and | | | | property in order to claim insurance while |
| the tenant come to an agreement where the | | | | experiencing financial troubles. In such a situation |
| tenant agrees to pay all taxes, insurance and | | | | the owner will lose all claim to the insurance and |
| miscellaneous expenses on the property in | | | | has no fall back to claim losses against the |
| addition to any normal fees that are expected | | | | tenant.Most triple net leases require the lessee or |
| under the agreement. The concept of Triple Net | | | | tenant to cover costs to maintain the roofing, |
| Lease has been very popular in commercial | | | | heating, etc.- practically anything related to the |
| building leasing because it reduces the owner's | | | | building that can wear out or be damaged during |
| need to worry about spending time and money | | | | the lease period. If you are in a triple net lease |
| for monitoring property conditions and providing | | | | agreement you will be excused of all property |
| maintenance.The basic idea of a net-net-net lease | | | | taxes and property insurance liabilities. You will be |
| is for the lessee to assume responsibility for all | | | | responsible for paying your utilities directly. You |
| property's expenses, both fixed and operating. | | | | can budget your personnel expenses and costs |
| The concept is well accepted and employed in all | | | | for routine maintenance and secure a quote for a |
| traditional sale-leaseback transactions for | | | | maintenance contract.There are a number of |
| long-term lease of larger properties. Both the | | | | important issues to be considered before entering |
| owner and the lessee agree upon a lease | | | | into a triple net lease agreement, including cost of |
| document stipulating that the tenant bears the | | | | capital, future operating performance and |
| operating responsibility for the property. In recent | | | | relationship with the building. All parties in a triple |
| years the triple net lease has become increasingly | | | | net lease arrangement need protection against |
| popular for leases of smaller properties. While | | | | surprise expenses that can occur as the facility |
| there are many versions, triple net typically | | | | ages and components wear, requiring maintenance |
| includes Taxes, Insurance, and Maintenance | | | | and eventual replacement. Some owners reduce |
| (TIM).In a triple net lease, the rental component is | | | | their risk by establishing a reserve fund into which |
| separately identifiable in the lease, making the | | | | each tenant makes regular payments. The owner |
| actual net investment return clear for property | | | | then covers property maintenance costs as |
| owners and investors. Unfortunately there are | | | | needed from this fund. |
| several pitfalls for the smaller property owner in | | | | |