What is a "triple net lease"?

A "triple net lease" is characterized by the tenant’s responsibility for several significant expenses related to the property, specifically property taxes, insurance, and maintenance, in addition to paying rent. This structure is prevalent in commercial real estate because it benefits landlords by transferring many of the ongoing costs and responsibilities of property management to the tenant.

With a triple net lease, tenants agree to cover costs that can fluctuate over time, such as property taxes that might increase based on local assessments, insurance premiums that can change yearly, and the costs of maintenance that may arise due to wear and tear or unexpected repairs. This agreement allows landlords to have more predictable income streams since the costs are primarily borne by the tenants rather than fluctuating expenses that they would otherwise need to manage.

In contrast, the other options describe different types of lease agreements that do not bear the same attributes as a triple net lease. For example, a lease where the landlord covers all expenses would not be classified as a triple net lease since it shifts the financial burden entirely onto the landlord. Similarly, a standard fixed rent lease does not involve the additional costs borne by tenants, and a lease that includes furniture and equipment does not pertain to the financial responsibilities typically associated with a triple net lease.