What does the landlord pay in a triple net lease?
A triple net lease typically passes taxes, insurance and operating costs to the tenant. The lease determines who pays for roof replacement and other major work.
In a triple net (NNN) lease, the tenant generally bears its agreed share of property taxes, insurance and operating or maintenance expenses in addition to base rent. The landlord pays costs the lease does not pass through. Those can include structural work or capital replacements, but “NNN” alone does not tell you who pays for the roof. The landlord may also pay a bill first and recover part of it from tenants later.
Trace one expense from invoice to reimbursement
Suppose the owner pays a $40,000 annual tax bill and a tenant’s lease assigns it 25% of recoverable taxes. Its share is $10,000 before any applicable adjustments. If the tenant already paid $9,000 through monthly estimates, the year-end reconciliation would show a $1,000 difference. That example says nothing about who pays to replace a roof membrane: that question belongs to a different clause.
What should you read before buying or signing?
Find the definitions of operating expenses and capital costs, the list of exclusions, the allocation formula and any caps. Distinguish maintaining the roof from replacing it, and responsibility for doing the work from responsibility for reimbursing it. Check the base rent against the total occupancy cost. Realty Income’s investor overview illustrates the net-lease model; NYC’s commercial lease guide gives tenants a practical framework for reviewing terms. For space-based allocations, see gross area versus net area.