What Is an NNN Lease

What This Includes

Commercial leases fall along a spectrum based on how operating expenses are divided between landlord and tenant. At one end is the full service gross lease, common in multi-tenant office buildings, where the landlord is responsible for property taxes, insurance, maintenance, and common area expenses, and the tenant pays a single rent figure that already accounts for those costs. At the other end is the triple net, or NNN, lease, where the tenant pays base rent plus its share of property taxes, insurance, and maintenance directly, leaving the landlord with a largely passive role.

Between these two extremes sit single net and double net leases. A single net lease, sometimes written as an N lease, generally has the tenant pay property taxes in addition to base rent, while the landlord retains responsibility for insurance and maintenance. A double net lease, often written as NN, shifts both property taxes and insurance to the tenant, while the landlord typically retains responsibility for structural maintenance, such as the roof and building structure. A modified gross lease is a further variation, often used in multi-tenant office or industrial buildings, where expense responsibilities are negotiated on a case by case basis rather than following a standard net lease category.

Understanding exactly which expenses a lease shifts to the tenant matters for both income projection and risk assessment. A landlord under a true triple net lease has minimal exposure to rising property taxes, insurance premiums, or routine maintenance costs, since those are passed through to the tenant, but may still retain responsibility for major structural repairs such as roof replacement or foundation issues, depending on how the specific lease defines maintenance. Reading the actual lease language, rather than relying on the general NNN label, is essential, since some leases described informally as triple net still carve out landlord responsibility for certain capital items.

For an investor evaluating a net leased property as 1031 exchange replacement property, the specific expense allocation directly affects the property's true net income and risk profile, which is why we help Albuquerque, NM investors review actual lease terms rather than relying on how a listing describes the lease type.

What We Deliver

Classification of a specific lease as gross, single net, double net, or triple net

Line by line review of which expenses the tenant versus landlord actually covers

Identification of any retained landlord responsibility for structural items

Comparison of net income stability across different lease structures

Verification of lease terms against how a property is marketed

Coordination with a Qualified Intermediary for net leased replacement property

Risk assessment tied to specific expense allocation

Coordination with the investor's tax and legal advisors

Common Situations

An Albuquerque, NM investor is reviewing a property marketed as triple net and wants the actual lease language confirmed before making an offer.

An investor in Albuquerque, NM is comparing a gross lease office building against a net leased retail property for income stability.

A property owner in Albuquerque, NM wants to understand what maintenance responsibilities remain under a lease described as NNN.

FAQs about What Is an NNN Lease

What is the difference between a single net, double net, and triple net lease?

A single net lease shifts property taxes to the tenant, a double net lease shifts taxes and insurance, and a triple net lease shifts taxes, insurance, and maintenance, progressively reducing landlord responsibility at each level. We help Albuquerque, NM investors identify exactly which category a specific lease falls into.

Does the landlord have any responsibilities under a triple net lease?

Often yes. Many triple net leases still hold the landlord responsible for major structural items such as the roof or foundation, even though the tenant covers taxes, insurance, and routine maintenance. We help Albuquerque, NM investors read the actual lease language to confirm this allocation.

How does a gross lease differ from a net lease?

Under a gross lease, the landlord covers most or all operating expenses and charges a single rent figure that reflects those costs, while under any net lease structure, some or all of those expenses are billed separately to the tenant. We help Albuquerque, NM investors compare income stability under each structure.

Why does the specific lease category matter for a 1031 exchange purchase?

The expense allocation directly affects the property's actual net income and risk exposure, so an investor evaluating net leased replacement property needs to review actual lease terms rather than assume a listing's description matches the true allocation. We help Albuquerque, NM investors perform this review before closing.

What is a modified gross lease?

A modified gross lease negotiates expense responsibility on a case by case basis rather than following a standard net lease category, often used in multi-tenant office or industrial buildings. We help Albuquerque, NM investors interpret these negotiated terms.

Are all properties marketed as NNN actually structured that way?

Not always. Some listings use the NNN label loosely even when the underlying lease retains certain landlord responsibilities, so reviewing the actual lease document is essential before relying on the label. We help Albuquerque, NM investors verify lease terms directly.

Compliance and Limits

Educational content only. Not tax, legal, or investment advice. Net leased property held for investment or business use generally qualifies as like-kind property under Internal Revenue Code Section 1031. Lease expense allocation is a matter of contract law and should be reviewed with a qualified real estate attorney. Consult with a Qualified Intermediary and a qualified tax advisor before making an investment decision.