Triple net lease question - Posted by Kristine-CA

Posted by James - Michigan Investor on January 26, 2009 at 06:37:08:

as in options

Kristine,

Have your family transfer the title into a trust, a property trust (grantor). Then have them quit claim
beneficial interest into your name/company/whatever.

You own the car tax free. You are not on title.

Win-win. :slight_smile:

Triple net lease question - Posted by Kristine-CA

Posted by Kristine-CA on January 24, 2009 at 16:48:56:

I’m trying to educate myself on a little on triple net leases.

My main question is how the owner/landlord is protected in the case of
default of any of the net terms–taxes, insurance and maintenance. Does the
lease dictate the extent and terms of insurance required or approval of major
improvements, etc?

I realize they are done all the time, but I can’t quite figure out how the owner
leaves the property in the hands of a commercial tenant. The business
owner/tenant may be good at their particular business but so good at
managing property, etc.

Is there some place I could read more about the pros and cons of triple net
leases (basics)? Thanks, Kristine

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.

HTH…

Re: Triple net lease question - Posted by David Krulac

Posted by David Krulac on January 25, 2009 at 10:24:29:

the terms of the lease provide the condititons upon which the lease is breached by not maintaining the property, insurance or taxes. If the leasee is in default that can be grounds for eviction.

Sometimes the NNN are for land only and the tenant puts up the building and pays for the parking lot. when they move the leasee takes their equipment but leaves the building and parking lot to the owner without compensation.

There was a small new car dealer who had his dealership in a semi-rural area but on a state hgihway. Mcdoanlds came in and offered to buy a portion of his car lot for a new retruarant. He would not sell but negotiated a 30 year lease, where all 30 years rent was due up front and for the next 30 years, no rent was due on a NNN lease. The car dealer took the multi-millions windfall and ended up buying 5 other car dealerships. That one lease caused him to step up his busines to the next level. NNN is a poweful tool.

Re: Triple net lease question - Posted by Bill H

Posted by Bill H on January 25, 2009 at 08:46:19:

Kristine; Look on the left sidebar here and go up to COMMERCIAL REI, double click it and go over there. Then go down a bit and click on the menu bar that gets you do discussions…ask the question there. I am sure Ray or one of the guys/gals can give you a good answer.

Good LUck,
Bill H

Re: Triple net lease question - Posted by Kristine-CA

Posted by Kristine-CA on January 25, 2009 at 15:46:30:

Hi JT. Helps a lot! Thank you.

Now for a really pressing, very off-topic question: We are buying (or
being sold to, as I see it) a car from a family member in OH. Both my
man and his mother, both college educated and internet business
people BTW, cannot figure out how to transfer the title. I asked to be
excused but they are hopeless. Can it be that hard? Is there some
website I can direct the OH relative to? Please help stay me out this!
Thanks, Kristine

Re: Triple net lease question - Posted by Bill H

Posted by Bill H on January 25, 2009 at 21:37:55:

Normally the roof is not covered by the NNN lease. It usually remains the responsiblity of the landlord/owner.

OH BMV - Posted by JT-IN

Posted by JT-IN on January 25, 2009 at 16:39:44:

The Oh BMV website should be able to help…

http://bmv.ohio.gov/title/title_info.htm

Let me know if you need other info…

JT

Re: OH BMV - Posted by Kristine-CA

Posted by Kristine-CA on January 25, 2009 at 17:48:33:

JT: thanks for your help. After an hour on both OH BMV and CA DMV I
understand my family members’ confusion. There is no “click here to
sell your vehicle to a CA resident” or "click here to buy an OH vehicle."
So they are not total slackers…they just hate clicking around and still
not understanding what to do. Me too.

No wonder I have deals in the title challenged dept. Seriously, these
things take mental time and energy that even smart people don’t
always have. If this situation involved real property (and it may well a
few years from now…), my in-laws would be even more confused (and
their son) would be even more confused and more likely to let it go
until there really a problem. Thanks again, Kristine

Well there is always this route… - Posted by JT-IN

Posted by JT-IN on January 25, 2009 at 18:06:47:

Donate a veh to charity… take the tax benefit… These folks will come p/u the veh, have you sign a POA and tow’er away… case closed… :slight_smile:

http://www.vehiclesforcharity.org/

Re: Well there is always this route… - Posted by Kristine-CA

Posted by Kristine-CA on January 25, 2009 at 19:02:42:

I’m definitely for this route! I’ve already made my case this evening for
the benefits and ease of this way. Please lord prevent that car from
crossing state lines and parking in front of my house. Kristine