What Is a Net Lease?
A net lease is a commercial lease structure in which the tenant pays base rent plus some or all of the property's operating expenses. The term "net" means the landlord receives rent "net" of the specified expenses, which the tenant pays directly or reimburses.
Types of Net Leases
- Single net (N) — Tenant pays base rent plus property taxes. The landlord pays insurance and maintenance. Relatively uncommon.
- Double net (NN) — Tenant pays base rent plus property taxes and insurance. The landlord pays maintenance and structural repairs.
- Triple net (NNN) — Tenant pays base rent plus property taxes, insurance, and all maintenance costs (including structural repairs and common area maintenance). The landlord receives pure net income with no additional expenses. This is the most common net lease structure.
- Absolute net (bondable net) — The tenant pays everything, including structural repairs and roof replacement, regardless of cost. The landlord has zero obligations. Used in investment-grade, single-tenant properties.
Triple-Net Leases in Florida
NNN leases are the dominant structure for freestanding commercial properties in Florida, including:
- National chain retailers (Walgreens, Dollar General, McDonald's)
- Bank branches
- Medical offices
- Auto service centers
- Ground lease developments
NNN leases are popular with investors because the landlord's income is predictable, management responsibilities are minimal, and tenant credit quality drives property value.
Net Lease vs. Gross Lease
- Net lease — Tenant pays base rent plus some or all operating expenses. Landlord's income is predictable.
- Gross lease (full service) — Tenant pays a single flat rent. The landlord pays all operating expenses from the rent collected. Common in multi-tenant office buildings.
- Modified gross — A hybrid where certain expenses are shared or allocated between landlord and tenant. Terms vary by negotiation.
Related Terms
- Commercial Lease — Net leases are a type of commercial lease
- Ground Lease — Often structured as NNN
- Property Tax — A tenant expense in net leases
- Rent Escalation Clause — Common in long-term net leases
Barnes Walker Net Lease Services
Barnes Walker's commercial real estate attorneys negotiate, draft, and review net lease agreements for landlords and tenants. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 83, Part II
The Florida Residential Landlord and Tenant Act governs lease agreements, security deposits, maintenance obligations, and the eviction process.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC