Insight from the Law office of Joseph Marino, PC

Real estate goes beyond buying or renting a property and signing a couple of agreements. It involves many deals and terms that may be complex to you if you haven’t studied the industry for years. For instance — net leases.

A net lease is usually compared to a gross lease, but they're not the same. With a net lease, the landlord waits until other expenses are cleared before receiving rent. Conversely, a gross lease requires the payment to come first to remove additional costs. For this guide, we'll be explaining what net leases are, how they work, and their types.

What Is a Net Lease?

A net lease is a lease agreement between two parties; the lessor and the lessee. In this agreement, the lessee pays the usual rent for the property but adds more dues in the form of insurance, property taxes, amongst other real estate costs. Typically, a net lease will require the tenant to pay all the real estate costs coming with the property. But in recent times, net leases now have forms where you get to pay part of the taxes, as well as the rent. It's still complex; let's get to how net leases work!

       How Does a Net Lease Work?

The usual rental agreement requires you to pay your rent while your landlord covers other costs. In this case, you are only a tenant, and you are aware that you don't own the property. But with a net lease agreement, you pay all the bills, including your rent. 

Once you rent a property on a net lease, you are responsible for all other bills. Usually, most net leases are not short-term agreements, and more times than not, the property owner reduces the rent because of the additional costs paid by the tenant. 

Types of Net Leases

Net leases have been existing for a good number of years, and it's not stopping anytime soon. There are different forms of net leases widely in use today. Initially, a net lease meant the tenant was paying all costs classified as either taxes, maintenance, or insurance. But today, there are several types of net leases, including;

1. Single Net Lease

In the single net lease, the tenant or lessee has an obligation to pay only one of all three classified costs.

For instance, the tenant may cover taxes while the landlord covers maintenance and insurance. This type isn't prevalent because it still places plenty of stress on the landlord.

    b. Double Net Lease

In the double net lease, the tenant has an obligation to pay for two classes of the additional costs, while the landlord covers one.

     c. Triple Net Lease

         In this deal, the tenant pays for all three classes of the additional cost. This type of net lease is

         usually for an extended period.

       Get Legal Advice for Your Real Estate Needs

The concept of net leases has been explained in this guide above, but before you propose or accept any net lease agreement, you need to be careful. 

It's usually better to involve an expert, so there are no mistakes. If you need an expert, look no further than The Law Offices of Joseph Marino. Not only do we have astute experience in real estate, but we also have professionals that are ready to help you succeed! Give us a call, and we’ll provide a consultation.