What is a triple-net lease?

A triple-net lease is an arrangement in commercial real estate where the tenant is responsible for paying three key expenses in addition to their rent: property taxes, insurance premiums, and maintenance costs. This type of lease is beneficial to property owners because it transfers many of the operational expenses to the tenant, allowing the owner to have a more predictable stream of income.

In this kind of lease structure, the landlord typically only has to manage the building's structure and some larger maintenance issues, while the tenant takes on the smaller, more frequent expenses, as well as ensuring the premises remain in good condition. This arrangement can often lead to more stable leases, as tenants know upfront the full extent of their financial obligations.

The other choices do not accurately represent the concept of a triple-net lease. For example, in a scenario where the owner pays for all expenses, it contradicts the core principle of a triple-net lease where financial responsibilities are predominantly placed on the tenant. When a tenant pays only for utilities and maintenance, it indicates a different lease structure that typically involves less responsibility than a triple-net lease. Finally, splitting expenses between the owner and tenant may suggest a different lease type altogether, which does not align with the tenant taking responsibility for taxes, insurance, and maintenance