Q: I hear people talking about a "net lease," a "net, net lease," and a "net, net, net lease." When I try to find out what they mean, it turns out to be like Alice-in-Wonderland -- it means just what the person wants it to mean. Can you tell me the difference between these terms?
A: This is a case of overkill -- or maybe, overcaution on the part of the parties to the lease. Organized real estate is trying to banish these terms and substitute others, to be used and understood by everyone.
Let's take the easy one first: "Net, net, net lease" should be replaced by "absolute net lease." It means a lease in which the tenant pays everything; the rent the owner receives is subject to no expenses, not even exterior and structural repairs. In place of "net, net" and "net, the term "net lease" should be used. Then the lease instrument must spell out exactly what the tenant is to pay for, and what the owner is to pay for; or to put it another way, the expenses the tenant is liable for, in addition to rent.
The lease agreement must spell out who pays the real estate taxes, insurance, interior, exterior and structural maintenance and alterations (if permitted), etc. Each item of expense must be allocated to the tenant or owner specifically. You can do your part by insisting on this and then using only the terms, "net lease" or "absolute net least."