My client today, a young, enthusiastic entrepreneur asked me to explain what "triple net charges" were and whether those charges were included in the rent. For all the others out there who may have encountered the term and didn't understand it, or who may be planning their own entrepreneurial endeavors, I thought I'd share the definition. Triple Net Charges are charges, usually, in addition to base rent which a tenant in a commercial lease will pay to the landlord. The tenant usually must pay his/her/its pro rata share of these charges. Pro rata being based upon percentage of the entire square footage of the shopping center leased. For example, if a tenant leases 2,000 sq. ft. of a 10,000 sq. ft. shopping center, or 20% of the shopping center, the tenant will generally pay 20% of the total triple net charges. The "Triple Net" Charges typically include: (1) the NET maintenance costs (e.g., snow removal, landscaping, grass cutting, parking lot repairs, roof/structural repairs to the building, etc.) for the property paid by the landlord; (2) the NET insurance paid on the property by the landlord; and (3) the NET taxes paid on the property by the landlord. (3 NETs, hence "Triple Net"). So now you know!
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