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Leasing Definitions - What Does "Net Lease" Mean?

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Definition: A Net Lease is a type of commercial real estate lease in which the lessee (tenant) pays for their space, as well as for part or all of certain “Usual Costs” (expenses associated with operating, maintenance and use of the property) that the landlord pays.

Expenses incorporated into net leases may include taxes, utilities, janitorial services, property insurance, property management fees, sewer, water, and trash collection. Net leases almost always favor the lessor (landlord) and should be negotiated to include caps, or, the maximum amount a landlord can increase fees each year.

Usual Costs that are added into net leases are generally broken down into three categories of expenses: maintenance, insurance, and taxes. A Double Net Lease requires the lessee to pay all taxes and insurance; and a Triple Net Lease requires the lessee to pay all three types of “Usual Costs.”

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Also Known As: Closed-End Lease

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