Check the Fine Print in Triple Net Lease Agreements

Posted on September 17, 2020

Not all triple net leases are created equal. Rather, investors purchasing commercial property with NNN tenants already in place should take the time to review each individual lease agreement to understand from the onset all the benefits, restrictions and obligations they will inherit after the purchase closes.

For example, investors should read the fine print to confirm that the responsibilities for insuring the property and paying insurance premiums, property taxes, utilities and costs for general repairs and maintenance all falls to the tenants. It is not uncommon for an agreement to carve out exceptions for these items. For example, a lease agreement may require a landlord to cover all costs associated with a building’s structural repairs, such as replacing a roof, or share with the tenant the costs of certain other expenses. As a final reminder, investors should review lease agreements to identify if they contain escalation clauses, or reset clauses, and understand how these potential rent increases can affect them and their tenants over the life of the lease.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.