Certified Pennsylvania Evaluator Practice Exam

What does a net-net-net lease require from the tenant?

1. The tenant pays only a base rent

2. The tenant pays a base rent and taxes only

3. The tenant pays a base rent and property management fees only

4. The tenant pays a base rent and all property expenses

The correct answer is: The tenant pays a base rent and all property expenses

A net-net-net lease, often referred to as an NNN lease, requires the tenant to be responsible for a significant portion of the property's operating expenses in addition to the base rent. In this type of lease, the tenant agrees to not only pay the base rent but also cover all property costs, which typically include property taxes, insurance, and maintenance expenses. This structure is beneficial to landlords as it shifts the financial responsibility for these costs to the tenant, providing more predictable income for the property owner. This leasing arrangement is common in commercial real estate, where landlords may prefer to minimize their exposure to variable operating costs. In summary, under a net-net-net lease, the total financial obligation of the tenant extends beyond just a basic payment for occupancy; it encompasses all related expenses that keep the property functional and compliant with local regulations.