Posted by Bill Gatten on March 15, 1999 at 15:51:59:
Literally speaking a “Net” Lease (i.e., paying the net amount of the payment vs. just some part of it)is one wherein the Lessee is contracted to pay itmes in additions to just Rent (usually inurance, taxes and mtce). Other terms such as “triple net,” “double net” etc. are more artful terminologies than legal terms ('prob’ly wont find them in Black’s Law).
However, until Mat’s post, I had not come across “Absolute Lease.” In our program we’ve always referred to the Occupancy/Use Agreement as being “akin” to a “Triple Net Lease” arrangement, as payments include PITI, PMI, HOA and Trustee Fee.
Triple Net refers to a lease wherein the tenant either directly pays or reimburses the landlord for the three main categories of expenses: (1) real estate taxes, (2) property and casualty insurance, and (3) operating expenses, e.g. repairs and maintenance, payroll, utilities. Not all triple net leases include the reimbursement of a management fee for the property.
A double net lease varies in meaning from one market area to another but usually refers to payment of the taxes and insurance by the tenant either through the use of direct bill or reimbursement.
The ultimate lease is called an absolute net lease. Under this agreement the tenant is responsible for ALL expenses including capital items such as reroofing and other structural items. This type of lease is also called a bond type lease.
Triple net leases are usually used on commercial rentals where the tenant pays all taxes, insurance, maintenance & repairs. I’ve never heard of a double net lease.