NNN Meaning

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 2,801 reviews

Jump to Section

Need help with a Triple Net Lease?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

The meaning of NNN is usually lost on most people since they will never have to sign or draft a commercial lease throughout their lives. Understanding how leases are different from rent and what to include can ultimately affect the outcome of your next transaction.

This article describes how NNN leases work, their expenses, how to calculate them, and other types of commercial lease agreements available in real estate transactions.

What Does NNN Mean?

NNN is another term for a triple net lease. A triple net lease is a type of lease agreement used in specific commercial real estate transactions, especially high-volume sales businesses that need space. Under this type of commercial lease, the tenant pays for property taxes, maintenance, and insurance by a percentage of the space they occupy.

This web page also describes NNN leases.

How Triple Net Leases (NNN) Work

Triple net leases are popular with real estate investors looking for a low-risk way to build equity while also earning a consistent, reliable income from the property. By passing on operating expenses and taxes to the tenant, you can mitigate the impact of market fluctuations and tax increases during the lease’s term.

Triple net leases vs. rent income provide significant benefits to property owners, including:

  • Attracts dependable, long-term tenants
  • Hands-off approach for investors
  • Investment stability
  • Equity
  • Flexibility

When an investor leases out a triple net property, they will typically finance the entire cost of the commercial building or a portion of it and then use rental payments to pay off the funded amount. They usually hold a triple net property and use it as an equity builder for at least five years before selling it at the right time.

Acquiring or Converting Property with Tenants

If you are acquiring another owner’s tenants, there should already be a NNN agreement in place that details all of the deal’s specifics, complete with clauses outlining the tenant’s and property owner’s specific financial responsibilities. By purchasing a commercial property that already has a triple net lease in place, you inherit the lease’s terms in their entirety.

Before deciding to purchase the property, you should carefully review the existing lease to determine whether you will be responsible for any insurance premiums or significant structural repair costs.

Acquiring or Converting Property without Tenants

If you are purchasing or converting a building for NNN leases, then you will want to work with a lawyer for lease agreements. They can help you draft an agreement tailored specifically for your unique business needs.

Meet some lawyers on our platform

Gregory F.

2 projects on CC
View Profile

Anand A.

11 projects on CC
View Profile

Justin K.

1 project on CC
View Profile

Briana C.

43 projects on CC
View Profile

Expenses Included in Triple Net Leases (NNN)

Triple net leases (NNN) agreements are standard in single-tenant retail buildings and single-user industrial buildings, medical offices, banks, pharmacies, grocers, and restaurateurs. Tenants agree to pay base rent plus taxes, maintenance, insurance, or TMI. Essentially, the tenant is responsible for all variable costs associated with the building’s occupancy.

Expenses included in triple net leases may consist of:

  • Insurance premiums
  • Janitorial & trash removal
  • Landscaping
  • Property taxes
  • Security
  • Signage
  • Utilities and maintenance

Depending on the lease terms, landlords may be responsible for significant expenses such as roof or parking lot repairs and upgrades to electrical, plumbing, and HVAC systems. Additionally, landlords may be liable for any structural issues that arise with the property not covered by standard maintenance expenses. Due to the high cost of resolving these issues, commercial real estate investors should thoroughly vet any potential triple net lease assets located in older properties.

What’s Not Included in an NNN lease?

While it may appear as though every expense is included in a NNN lease, certain expenses are the landlord’s or a specific tenant’s responsibility. Tenant improvements, or TI, refers to work performed on an individual tenant’s space.

A landlord cannot charge tenants for:

  • Business expenses
  • Business revenues
  • Landlord debts
  • Landlord late payment fees
  • Landlord negligence
  • Assignments of lease

It is critical to understand that each lease is unique, and commercial leases can be extremely lengthy and complicated. It is wise to have a knowledgeable legal professional review of the lease to ensure that it includes everything you believe it contains when trying to figure out how to write a lease agreement with solid lease terms.

Triple Net Lease Calculation Example

Now that you have an understanding of NNN leases, or at least have an idea of what could be included, it is good to demonstrate an example. The rent on a commercial building is often calculated using per-square-foot numbers. It is worth analyzing the numbers since they can reveal whether the property is suitable for tenants.

Below, we’ve created a triple net lease calculation example to bring how they work into focus:

  • Janet Getty is an independent commercial landlord who owns a 10,000 square-foot retail building
  • She is asking $12 per square foot under a NNN building lease agreement
  • By multiplying $12 by 10,000 square feet, we come up with a total annual rent of $120,000, or $10,000 per month
  • Similar units in the area rent for nearly $15 per square foot
  • However, Ms. Getty wants to use a NNN lease, which passes TMI costs on to tenants, which may cost the tenant between
  • The prepared estimate indicates that tenants will spend around $2,000 a month in TMI or $24,000 per year
  • This number brings the expected rent total to $144,000 per year or $12,000 per month
  • Now, we can take the new calculation to determine the effective square foot rate at $14.40
  • This retail space, even after NNN obligations, are more cost-effective than other buildings in the area

As you can see from the above-referenced example, the initial rent rate seemed like a great deal, and it still is. However, when you dig into the numbers, you’ll notice how much closer your rent gets to standard square foot rates in your area. That’s what makes a NNN lease so powerful for retailers.

They often require large spaces that can handle high volumes at predictable costs with some tenant control over the amount of rent money.

Other Types of Commercial Leases

Commercial leases come in a variety of forms, meaning that NNN leases are not the only option. As is the case with any legal commercial contract, the parties can tailor the document to their specific transaction and requirements. Start by deciding who will be responsible for certain property-related obligations.

Other types of commercial leases to consider include:

  • Gross Leases : A gross lease requires the tenant to pay only rent. This option is where both the landlord and tenant agree on a fixed monthly rent, with the landlord covering the cost of any necessary repairs, insurance, and taxes, and is ideal for a commercial office lease.
  • Single Net (N) Leases : The tenant is responsible for both monthly rent and property taxes on the property for a single net lease. Maintenance and insurance are the landlord’s responsibility.
  • Double Net (NN) Leases : In a double net lease, the tenant is responsible for monthly rent, property taxes, and insurance, but the property landlord remains solely responsible for maintenance.

A lawyer for lease agreements can help you draft NNN leases or other types of commercial leases that protect your investment and legal rights. They can also address issues such as how to negotiate a commercial lease. Get in touch with a knowledgeable and experienced legal professional from your state today for more information.

Post a project in ContractsCounsel’s marketplace to get flat fee bids from lawyers for your legal project. All lawyers are vetted by our team and peer-reviewed by customers for you to review before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Melissa L. on ContractsCounsel
View Melissa
Member Since:
October 26, 2020

Melissa L.

Free Consultation
Get Free Proposal
Des Moines, IA
14 Yrs Experience
Licensed in IA
City University School of Law

Seasoned negotiator, mediator, and attorney providing premier legal advice, services, and representation with backgrounds in education, healthcare, and the restaurant and manufacturing industries

Ross F. on ContractsCounsel
View Ross
Member Since:
October 27, 2020

Ross F.

Managing Partner
Free Consultation
Get Free Proposal
Bedford, New Hampshire
11 Yrs Experience
Licensed in MA, NH
University of Arizona

I am an experienced technology contracts counsel that has worked with companies that are one-person startups, publicly-traded international corporations, and every size in between. I believe legal counsel should act as a seatbelt and an airbag, not a brake pedal!

Annais N. on ContractsCounsel
View Annais
Member Since:
October 27, 2020

Annais N.

Free Consultation
Get Free Proposal
Miami, FL
9 Yrs Experience
Licensed in FL, LA, MD
Loyola University New Orleans College of Law

Attorney (FL, LA, MD) | Commercial Real Estate Attorney and previous Closing Manager (Driving Growth from $10M to $50M+/month).

John H. on ContractsCounsel
View John
Member Since:
November 10, 2020

John H.

Free Consultation
Get Free Proposal
Mobile, AL
11 Yrs Experience
Licensed in AL
Thomas Goode Jones School of Law

John Daniel "J.D." Hawke is an experienced attorney with a law practice in Mobile, Alabama. He was born in Fairhope, Alabama and after earning his undergraduate degree at Auburn University, he received a law degree from Thomas Goode Jones School of Law in 2010. After law school, he formed the Law Office of J.D. Hawke LLC and over the last decade he has fought incredibly hard for each and everyone of his clients. His practice focuses on representing people facing criminal charges and clients dealing with family law matters. In addition to criminal defense and domestic relations cases, he also regularly handles contract disputes, personal injury cases, small business issues, landlord/tenant disputes, document drafting, and estate planning. He is licensed to practice law in the State of Alabama and the United States District Court for the Southern District of Alabama.

Thomas C. on ContractsCounsel
View Thomas
Member Since:
October 30, 2020

Thomas C.

Free Consultation
Get Free Proposal
Denver, CO
9 Yrs Experience
Licensed in CO
University of Colorado Law School

Thomas Codevilla is Partner at SK&S Law Group where he focuses on Data Privacy, Security, Commercial Contracts, Corporate Finance, and Intellectual Property. Read more at Skandslegal.com Thomas’s clients range from startups to large enterprises. He specializes in working with businesses to build risk-based data privacy and security systems from the ground up. He has deep experience in GDPR, CCPA, COPPA, FERPA, CALOPPA, and other state privacy laws. He holds the CIPP/US and CIPP/E designations from the International Association of Privacy Professionals. Alongside his privacy practice he brings a decade of public and private transactional experience, including formations, financings, M&A, corporate governance, securities, intellectual property licensing, manufacturing, regulatory compliance, international distribution, China contracts, and software-as-a-service agreements.

Michael B. on ContractsCounsel
View Michael
Member Since:
October 30, 2020

Michael B.

Free Consultation
Get Free Proposal
12 Yrs Experience
Licensed in IL, MN, WI
University of the Pacific

Michael has extensive experience advising companies from start-ups to established publicly-traded companies . He has represented businesses in a wide array of fields IT consulting, software solutions, web design/ development, financial services, SaaS, data storage, and others. Areas of expertise include contract drafting and negotiation, terms of use, business structuring and funding, company and employee policies, general transactional issues as well as licensing and regulatory compliance. His prior experience before entering private practice includes negotiating sales contracts for a Fortune 500 healthcare company, as well as regulatory compliance contracts for a publicly traded dental manufacturer. Mr. Brennan firmly believes that every business deserves a lawyer that is both responsive and dependable, and he strives to provide that type of service to every client.

Lyndsey G. on ContractsCounsel
View Lyndsey
Member Since:
October 30, 2020

Lyndsey G.

Free Consultation
Get Free Proposal
Roseville, MN
8 Yrs Experience
Licensed in MN
Mitchell Hamline College of Law

Attorney of 6 years with experience evaluating and drafting contracts, formation document, and policies and procedures in multiple industries. Expanded to estate planning last year.

George O. on ContractsCounsel
View George
Member Since:
November 2, 2020

George O.

Managing Attorney
Free Consultation
Get Free Proposal
Houston, Texas
15 Yrs Experience
Licensed in TX
South Texas College of Law

George is a lifelong Houston resident. He graduated from St. Thomas High School and then Texas A&M University. He obtained his Doctor of Jurisprudence from South Texas College of Law in 2007. He is experienced in real estate, estate planning & probate, civil/commercial matters, personal, injury, business matters, bankruptcy, general counsel on-demand, and litigation. He is active in the community serving as past-president of the St. Thomas Alumni Board, a current member of the Dads Club Aquatic Center Board of Directors, current member of the Dickinson Little Italy Festival of Galveston County Board of Directors, and former PTO President for Briarmeadow Charter School.

Ramsey T. on ContractsCounsel
View Ramsey
Member Since:
November 3, 2020

Ramsey T.

Founding Partner
Free Consultation
Get Free Proposal
New York
25 Yrs Experience
Licensed in NY
William and Mary

My clients are often small and medium size technology companies, from the "idea" stage to clients who may have raised a round or three of capital and need to clean up a messy cap table. I help with all legal matters related to growth that keep founders up at night - hiring people, allocating equity, dealing with shareholders and investors, client negotiations and early litigation counseling (before you need a litigator). I've seen a lot, and because I run my own business, I understand the concerns that keep you up at night. I’ve been through, both on my own and through other clients, the “teething” pains that will inevitably arise as you scale-up – and I’m here to help you. I have over 20 years international experience devising and implementing robust corporate legal strategies and governance for large multinationals. I now focus on start-ups and early/medium stage technology companies to enable a sound legal foundation for your successful business operations. Many of my clients are international with US based holding companies or presences. My 17 years abroad helps me "translate" between different regimes and even enabling Civil and Common Law lawyers to come together. Regularly, I handle early stage financings including Convertible Notes, Seed and Series A/B financings; commercial and technology contracts; international transactions; tax; mergers and acquisitions.

Sammy N. on ContractsCounsel
View Sammy
Member Since:
November 4, 2020

Sammy N.

Free Consultation
Get Free Proposal
Raleigh, NC
3 Yrs Experience
Licensed in NC
Campbell University School of Law

Sammy Naji focuses his practice on assisting startups and small businesses in their transactional and litigation needs. Prior to becoming a lawyer, Sammy worked on Middle East diplomacy at the United Nations. He has successfully obtained results for clients in breach of contract, securities fraud, common-law fraud, negligence, and commercial lease litigation matters. Sammy also counsels clients on commercial real estate sales, commercial lease negotiations, investments, business acquisitions, non-profit formation, intellectual property agreements, trademarks, and partnership agreements.

Brad H. on ContractsCounsel
View Brad
Member Since:
November 6, 2020

Brad H.

Free Consultation
Get Free Proposal
Raleigh, NC
10 Yrs Experience
Licensed in NC
University of North Carolina

Brad is a business attorney with experience helping startup and growing companies in a variety of industries. He has served as general counsel for innovative companies and has developed a broad knowledge base that allows for a complete understanding of business needs.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call