Business Brokers BC Blog

Property Leases

Monday, April 12th, 2010

When buying a business the negotiation of a lease for the premises is a key element in the transaction.  For those of you that want a quick summary of the key terms and definitions read on …..

What are the 3 “nets” in Triple Net? – Building Insurance, Building Maintenance and Property taxes.

Base Rent or Net Base Rent:

This is typically net rent that the landlord receives for allowing a tenant the use of the space and does not include any expenses other than capital expenses that are associated with the use of the property so the base rent would not include taxes, maintenance, insurance, utilities etc.

It should be noted that insurance carried by any landlord is for the building only and not business insurance which the tenant is typically required to carry under a tenancy lease.

Net Lease:

The tenant pays the net base rent to landlord, plus all expenses which are normally associated with ownership, such as utilities, repairs, insurance and taxes. Such a lease is also referred to as a “closed-end lease”.

Single net Lease:

The tenant pays the net base rent to landlord plus the Property taxes.

Double Net lease:

The tenant pays the base net rent to the landlord, plus the property taxes and building insurance expenses. Landlord pays for the maintenance, capital expenditures and other expenses. (These are not very common).

Triple Net Lease:

The Tennant pays base net rent to the landlord plus, the property taxes, building insurance, and building maintenance expenses.

In such a lease, the tenant is responsible for all costs associated with repairs or replacement of the structural building elements of the property

Gross Lease:

The tenant pays a flat amount which includes base net rent to the landlord, property taxes allowance, building insurance allowance, and building maintenance allowance. It is an all inclusive of the “triple net”.

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