Business Definition for: net lease
net lease
financial lease stipulating that the user (rather than the owner) of the leased property shall pay all maintenance costs, taxes, insurance, and other expenses. Many real estate and oil and gas limited partnerships are structured as net leases with
escalator clauses
, to provide limited partners with both depreciation tax benefits and appreciation of investment, minus cash expenses.
See also
gross lease
net lease
lease whereby, in addition to the rent stipulated, the lessee (tenant) pays such expenses as taxes, insurance, and
maintenance
. The landlord's rent receipt is thereby net of those expenses.
See also
gross lease
net lease
a
lease
whereby, in addition to the rent stipulated, the lessee (tenant) pays such expenses as taxes, insurance, and
maintenance
. The landlord's rent receipt is thereby "net" of those expenses.
Example: Baker leases retail space from Abel on a net lease. Abel can expect to receive the full rent without deducting for
operating expenses
, which are paid by Baker. In practice, various levels of net leases are often used to designate arrangements where the tenant pays only some types of expenses and the landlord pays other types.
See also
triple-net lease
Related Terms:
property lease under which the lessor (landlord) agrees to pay all the expenses normally associated with ownership (insurance, taxes, utilities, repairs). An exception might be that the lessee (tenant) would be required to pay real estate taxes above a stipulated amount or to pay for certain special operating expenses (snow removal, grounds care in the case of a shopping center, or institutional advertising, for example). Gross leases are the most common type of lease contract and are typical arrangements for short-term tenancy. They normally contain no provision for periodic rent adjustments, nor are there preestablished renewal arrangements.
property lease under which the lessor (landlord) agrees to pay all the expenses normally associated with ownership (insurance, taxes, utilities, repairs). An exception might be that the lessee (tenant) would be required to pay real estate taxes above a stipulated amount or to pay for certain special operating expenses (snow removal, grounds care in the case of a shopping center, or institutional advertising, for example). Gross leases are the most common type of lease contract and are typical arrangements for short-term tenancy. They normally contain no provision for periodic rent adjustments, nor are there preestablished renewal arrangements.
one in which the tenant is to pay all operating expenses of the property; the landlord receives a net rent.
Example: Big Buy Supermarkets enters into a triple-net lease. They are to pay for all the taxes, utilities, insurance, repairs, janitorial services, and license fees; any debt service and the landlord's income taxes are the responsibility of the landlord.
Referring Terms:
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