[1] These include expenses such as property taxes, insurance, maintenance, repair, and operations, utilities, and other items.
There are standard names in the commercial real estate industry for different sets of costs passed on to the tenant in a net lease.
[citation needed] In a double net lease (Net-Net or NN), the lessee or tenant is responsible for property tax and building insurance.
A triple net lease (triple-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the three "nets") on the property in addition to any normal fees that are expected under the agreement (rent, utilities, etc.).
Notably, these additional risks include the obligations to rebuild after a casualty, regardless of the adequacy of insurance proceeds, and to pay rent after partial or full condemnation.
The concept is to make the rent absolutely net under all circumstances, equivalent to the obligations of a bond: hence the "hell-or-high water" moniker.
For example, the owner will finance a significant portion of the purchase price on a property and pay the resulting mortgage with the lessee's monthly owed rent.