Understanding the various types of commercial lease contracts you can use is crucial, whether you are a landlord looking to lease their commercial property out or a business owner looking for a location to rent.
There are three main ways of pricing a rental contract to understand: triple, double and single net lease contracts. Each has some unique and important differences.
What is left out of the basic price?
Some commercial contracts wrap more things up in the monthly rental fee, while others leave more things for the tenant to pay on top of the monthly fee.
- Triple net leases require that the tenant pays three things on top of the base rent: property tax, insurance and maintenance.
- Double net leases require the tenant to pay property taxes and insurance. The cost of maintenance is already built into the monthly fee.
- Single net leases require the tenant to pay the property tax in addition to the base fee, with that base fee already covering maintenance and insurance.
The prices of services can go up or down, and maintenance requirements can be lower than expected or higher than expected. There are pros and cons to each type of lease for both parties, and it is not always easy to predict who will benefit most from a particular option at the time of signing a commercial lease. Comparing prices between two different properties can also be much harder when each uses a different number of nets.
Seeking appropriate legal guidance to understand more about the possible benefits and risks to you of the three different methods is a wise place to start.