Real Estate Lawyer Houston Texas
Terms of triple net leases
There are many different terms that describe the flow of triple net lease sale. Some leases is NNN, triple net lease rental real N, net net net leases or even "hell or high water" lease. In order continuity, in this article refer to them as through three net leases.
Most definitions agree that the sale is triple net lease where the tenant pays rent to the landlord, and all taxes, insurance and maintenance costs associated with the use of the property. For the most part, businesses like restaurants, fast food chains and retailers are more likely to use a triple net lease. In a busy typical intersection of a person can look around and see many recognizable names using triple net leases, such as Wal Mart, Wendy's, Home Depot, Office Max, etc.
As with any type of lease between the landlord and tenant, triple net leases to states that the sale be held responsible for what as payment of invoices. In this type of contractual obligations remain largely on tenant side, as indicated by the above definition. Although it may seem an unfair advantage to the owner, the terms of the triple net lease have advantages and disadvantages that are both the landlord and tenant. Consider some of these for each side.
Advantages and disadvantages to the owner:
Since the tenant is responsible for taxes, increased property taxes in property will be charged to the tenant. The landlord can not sense the value of pressure against time a tax increase on hold because they are not liable to pay. For Moreover, if a tax increase and requires the tenant moves out, can be very difficult to find a new tenant, if the taxes are prohibitive.
-Another benefits to the owner that the tenant is responsible for the acquisition of property insurance and keep up with payments. That's OK, too long coverage Insurance is complete and in good standing and the person making the payment are not unforeseen financial problems.
However, if the tenant has problems money, it is not uncommon to inflict damage on the home to collect insurance money. To counter this, some owners expect a reserve fund, or bond is estimated in the context of the triple net lease. This is an amount that the tenant must pay regularly into an account that accumulates over time and can be used in case of difficulties financial or bankruptcy.
"Another interesting advantage of the triple net lease for the landlord is the fact that the building can generate a high level income with little effort. Since the tenants are responsible for the care of their lease, they are generally very nice, with keeping things in good condition and is able to make improvements at their expense.
Advantages / disadvantages for the tenant:
With leases of three net for sale, the tenant may enjoy many good things about the ownership and control property that does not involve significant capital outlay that goes along with the purchase of an office or a new building.
"A triple net lease is generally written for a period of at least fifteen years and can be up to fifty years. This benefits the tenant property during the time that the money paid as rent will be little or no increase during the contract period. This can be a great advantage of "control rent "at a time usually rent increases that occur gross annual rents.
"A tenant can first during the negotiations contract, to negotiate a set ceiling on how high they can raise property taxes. After a certain amount of agreement is reached, the owner becomes responsible to cover any amount over the cap limit. Tenants may also seek to negotiate similar limits are set insurance premiums and maintenance costs for the maintenance /.
When considering the advantages and disadvantages of triple net lease, one thing is clear – it is very important that the terms of the contract is clear to both parties. The contract should be read carefully by the landlord and the tenant before the end. It is always a good idea to seek out and consult an attorney who deals primarily with real estate issues to help make things completed to the satisfaction of both parties.
About the Author
The Johnson Development Corp. is a Houston-based residential and commercial land development company that has over 40 years of experience in the real estate development business. For more information visit http://www.johnsondevelopment.com
Hlavinka & Associates – Houston, Texas Law Firm