What distinguishes a triple net lease from a gross lease?

What distinguishes a triple net lease from a gross lease?

• A. A triple net lease includes property taxes
• B. A gross lease requires additional fees
• C. A triple net lease requires the lessee to cover operating costs
• D. A gross lease allows for more negotiable terms

Answer: (C)

A triple net lease is characterized by the lessee's responsibility for covering not only the base rent but also additional expenses related to the property. These expenses often include property taxes, insurance, and maintenance costs. This structure places a heavier financial responsibility on the tenant, as they essentially agree to cover operating costs in addition to the rent. This contrasts sharply with a gross lease, where the landlord typically absorbs these costs, providing a more straightforward payment structure for the tenant. In a gross lease, the rent payments encompass all operating expenses, which could lead tenants to pay a higher base rent without having to worry about varying costs over time. The distinction lies mainly in who bears the financial burden of these additional expenses, making option C the correct choice in highlighting this critical difference between the two types of leases.

A triple net lease is characterized by the lessee's responsibility for covering not only the base rent but also additional expenses related to the property. These expenses often include property taxes, insurance, and maintenance costs. This structure places a heavier financial responsibility on the tenant, as they essentially agree to cover operating costs in addition to the rent. This contrasts sharply with a gross lease, where the landlord typically absorbs these costs, providing a more straightforward payment structure for the tenant.

In a gross lease, the rent payments encompass all operating expenses, which could lead tenants to pay a higher base rent without having to worry about varying costs over time. The distinction lies mainly in who bears the financial burden of these additional expenses, making option C the correct choice in highlighting this critical difference between the two types of leases.