National Real Estate Exam (PSI)Leasing and Property ManagementMedium
A tenant is leasing a commercial property under a triple net (NNN) lease. Which of the following expenses would the tenant MOST LIKELY be solely responsible for under this type of agreement?
- AReal estate taxes, property insurance, and common area maintenance (CAM).
- BMortgage payments on the landlord's loan for the property.
- CProperty management fees for the building.
- DStructural repairs to the roof and foundation.
Show answer & explanationAnswer & explanation
Correct answer: A. Real estate taxes, property insurance, and common area maintenance (CAM).
A triple net (NNN) lease typically makes the tenant responsible for all three 'nets': real estate taxes, building insurance, and common area maintenance (CAM) charges, in addition to the base rent.
Why the other options are wrong
- B. Mortgage payments are always the landlord's financial obligation, not the tenant's, regardless of lease type.
- C. Property management fees are generally the landlord's expense, not passed directly to the tenant in a NNN lease.
- D. Structural repairs are typically the landlord's responsibility, even in NNN leases, unless explicitly stated otherwise.
Triple Net (NNN) Lease
A lease agreement where the tenant pays a base rent plus all three major property operating expenses: real estate taxes, building insurance, and common area maintenance (CAM).
- Most comprehensive form of net lease for tenant expenses.
- Landlord typically only responsible for structural repairs (roof, foundation) and mortgage.
- Common in commercial and industrial properties.
Memory trick: NNN means 'No Nuisance for the Owner' on these three big expenses.