NNN, spoken as triple net, describes a lease where the tenant pays rent plus the three major carrying costs of the property: property taxes, building insurance, and maintenance. The label gets used loosely in marketing, and the gap between what a listing calls triple net and what the actual lease document requires is where a landlord's real obligations hide. The three nets are a starting framework, not a guarantee that a specific lease follows it to the letter.
The Three Nets, One at a Time
Taxes: the tenant reimburses or pays directly the property tax bill, though the mechanism matters, since a landlord who pays the county first and bills the tenant later is exposed if the tenant is slow or disputes the amount. Insurance: the tenant typically carries or reimburses building insurance, but liability coverage and named-insured requirements should be spelled out rather than assumed. Maintenance: the tenant handles day-to-day upkeep, parking lot repairs, and often HVAC, but structural and roof responsibility is the single most negotiated line item in a triple net lease and is not automatically included just because the lease is labeled NNN.
Where the Structure Reverts to the Landlord
Roof and structure sit outside the tenant's obligation in a meaningful share of leases marketed as triple net, which means the landlord remains on the hook for the single most expensive repair category a commercial building faces. A lease that reads 'NNN' on the cover page but carves out roof and structure in an exhibit further back is still accurately labeled by the industry's loose convention, so the exhibits matter more than the label. Capital expenditures near the end of a tenant's term are another common carve-out, where a tenant nearing lease expiration has little incentive to maintain a system it won't use much longer, and a well-drafted lease anticipates that with a reserve or a defined handoff condition.
Absolute Net Versus Triple Net
An absolute net lease pushes every obligation, including roof and structure, onto the tenant, leaving the landlord with functionally nothing to manage beyond collecting rent. This structure appears most often in build-to-suit deals for national credit tenants, where the tenant's own facilities team already handles every building system across a large portfolio and prefers full control. A buyer comparing a triple net listing against an absolute net listing at similar cap rates is not comparing equivalent risk, even though both get marketed with the same three letters.
Checking Which Version Applies
The lease exhibit covering maintenance and repair, not the cover page or the listing flyer, is where the actual allocation lives. A buyer or their attorney should confirm four things directly from that exhibit: who pays for roof replacement, who pays for HVAC replacement versus routine service, whether there is a capital reserve requirement, and what condition the tenant must return the building in at lease end. Skipping this step and relying on the label alone is the most common way an investor ends up owning obligations they thought the tenant carried.
Common 1031 Exchange Questions
What are the three nets in a triple net lease?
Property taxes, building insurance, and maintenance. The tenant pays or reimburses the landlord for these three cost categories in addition to base rent, though the exact mechanism and scope vary by lease.
Does a triple net lease always include roof and structural repairs as a tenant obligation?
Not always. Roof and structure are commonly carved out and left with the landlord even when a lease is marketed as triple net, so this needs to be confirmed in the maintenance exhibit rather than assumed from the label.
What is the difference between a triple net lease and an absolute net lease?
A triple net lease covers taxes, insurance, and maintenance, sometimes with roof and structure carved back to the landlord. An absolute net lease pushes every obligation, including roof and structure, onto the tenant, leaving the landlord with essentially no ongoing responsibility.
Can a triple net property serve as a 1031 exchange replacement?
Yes, a triple net property held for investment generally qualifies as like-kind real estate for exchange purposes. Understanding which maintenance obligations actually sit with the tenant still matters for evaluating whether the property is a sound replacement, separate from its tax treatment.
Why do landlords still owe money on a property described as triple net?
Because the lease's actual exhibits, not the marketing label, define the split. A landlord who assumes the tenant covers everything based on the term triple net can be surprised by a roof or major system replacement bill the lease never actually shifted.
