Re: Triple net lease question - Posted by JT-IN
Posted by JT-IN on January 25, 2009 at 14:31:39:
Usually the expenses that the tenant is responsible for in a comm’l NNN lease are pass thru expense… at least for two of them, taxes and insurance. The norm is that the landlord pays these expenses and bills them to the tenant in the form of a CAM charge; CAM stands for: (common area maintenance).
So the rent is expressed as say 12 dollars per foot, plus CAM. CAM is also expressed in 3.14 per foot… so lets say that one rented 1000 sq ft, the rent @ 12 per ft would be 1000 per month, and the CAM would be 3140 per yr, or 261.67 added to the 1K in base rent, for a total rent of 1261.67 per month. CAM is adjusted whenever the expenses for taxes, insurance or common maintenance go up… Most times these are estimated and then adjusted for actual costs in arrears.
So really the only issue of maintenance if things are done this way is how one maintains their own space…? As to build-outs if initial const is required, there are usually plan drawings and specs, and the cons must be done accordingly… At least all the above is what is recommended… If it is not done as such, then maybe it is the LL that is the poor biz person…
As to liability ins required by the Tenant, usually there is a subrogation clause in the lease… this essentially states that their ins comes first, the LL’s last… for any such claims of say a slip and fall, etc. There are specs as to the amount of coverage and who and how the LL is to be named in the policy, as an additional insured. If by some chance they don’t pay the premium, the additional insured (LL) will be notified prior to any lapse so that one could protect their interest and not be uninsured.