Single Net Lease
What Is a Single Net Lease?
A single net lease is a commercial real estate lease agreement in which the tenant consents to pay property taxes notwithstanding rent. A single net lease is a form of pass-through lease wherein taxes associated with the property become the responsibility of the tenant rather than the landlord.
Under a single net lease, the landlord is as yet responsible for the other operating expenses engaged with running the property. Single net leases are a more uncommon form of a commercial lease.
Grasping Single Net Leases
A single net lease is a type of net lease where the tenant takes on some or all of the operating cost of a building.
A single net lease is some of the time mistook for the concept of a net lease. Net lease alludes to every one of the types of net leases — single net leases, double net leases, and triple net leases — while single net leases are explicitly the net lease with the tenant taking on just a single operating expense, most usually the property taxes.
Single Net Leases versus Other Lease Types
Net leases are the opposite side of the coin from gross leases. In a gross lease, the tenant pays a settled upon amount for rent, and the landlord is responsible for everything connected with the property. Most rental agreements for non-commercial properties are gross leases or a modified gross lease where the tenant is responsible for personal utilities and that's it.
Concerning other net leases, double net leases and triple net leases have the tenant paying two and three of the major operating expense categories, individually. The major operating expense categories are taxes, insurance, and maintenance.
Special Considerations
According to a landlord's point of view, a single net lease has different upsides and downsides. From a passive investment stance, a property investor would incline toward a triple net lease, as there are no cerebral pains from dealing with the property like a traditional landlord. The tenant company may not be keen on carrying all the building costs, so the double and single net leases might be a compromise between the two gatherings.
As well as shifting the cost burden in a single net lease, the landlord likewise moves any negotiation or campaigning with nearby experts on commercial property tax rates.
In theory, an absentee property owner with properties in different districts of the country could contract out maintenance, gain economies of scale by guaranteeing across the portfolio and leave nearby taxation issues for the tenants to figure out. While a single net lease is more work than a triple net lease, it is as yet better than a gross lease in terms of the burden it puts on the property owner.
Features
- A single net lease is a form of pass-through lease where taxes associated with the property become the responsibility of the tenant rather than the landlord.
- Under a single net lease, the landlord is as yet responsible for the other operating expenses engaged with running the property.
- Single net leases are a more uncommon form of a commercial lease.
- Most rental agreements for non-commercial properties are gross leases, under which the tenant is responsible for personal utilities and that's it.
- A single net lease is a commercial real estate lease agreement in which the tenant consents to pay property taxes notwithstanding rent.
