A double net lease, often called an NNN lease? Wait: that’s triple. A double net lease, or NN lease, is a commercial lease where the tenant pays the base rent plus two major property expenses: property taxes and property insurance.
The landlord typically remains responsible for building maintenance and repairs, although the exact arrangement depends on the lease.
This makes a double net lease a middle ground between a gross lease and a triple net lease. The tenant takes on more expenses than under a typical gross lease, but usually fewer property-related responsibilities than under a triple net lease.
If you’re comparing commercial properties, understanding how a double net lease works can help you look beyond the advertised rent and estimate what you’ll actually pay.
How Does a Double Net Lease Work?
In a double net lease, the tenant generally pays three components:
- Base rent
- Property taxes
- Property insurance
The two additional expenses are the “two nets” in a double net lease.
For example, suppose a commercial property has a base rent of $6,000 per month. The tenant is also responsible for $800 per month in property taxes and $250 per month in insurance.
The estimated monthly occupancy cost would be:
$6,000 + $800 + $250 = $7,050
The tenant therefore isn’t really paying only $6,000 per month.
The actual cost is closer to $7,050 before considering any other expenses that may be assigned to the tenant under the lease.
This distinction matters when comparing commercial properties. A property with a lower advertised rent isn’t necessarily cheaper once additional lease expenses are included.
What Are the Two Nets in a Double Net Lease?
The two nets generally refer to property taxes and property insurance.
Property Taxes
The first net is property taxes.
Under a double net lease, the tenant generally pays the property taxes associated with the leased property. The tenant may pay the tax authority directly or reimburse the landlord, depending on the lease.
If property taxes increase, the tenant’s total occupancy cost may increase as well.
For example, if annual property taxes rise from $18,000 to $21,000, the tenant could be responsible for the additional $3,000 if the lease passes those costs through.
The lease should explain how taxes are calculated and allocated.
Property Insurance
The second net is property insurance.
The tenant generally pays some or all of the insurance costs associated with the property under the terms of the lease.
Insurance costs can change over time. Premiums can depend on factors such as the property, its location, the type of business operating there, coverage requirements, and other circumstances.
Before signing a double net lease, check exactly which insurance costs are the tenant’s responsibility.
Who Pays for Maintenance in a Double Net Lease?
This is one of the most important differences between a double net lease and a triple net lease.
In a typical double net lease, the landlord remains responsible for building maintenance and repairs, while the tenant pays property taxes and insurance.
But “typical” does not mean universal.
Commercial leases can be negotiated in many different ways. A particular double net lease could assign certain maintenance responsibilities to the tenant.
For example, the tenant might be responsible for maintaining its own interior space, while the landlord handles the building’s exterior and major systems.
The lease, rather than the label “double net,” determines the actual responsibilities.
Double Net Lease Example
Imagine you’re leasing a 5,000-square-foot commercial property.
The base rent is $7,500 per month.
The annual property taxes are $24,000, and annual property insurance costs $6,000.
The yearly base rent is:
$7,500 × 12 = $90,000
The annual taxes and insurance are:
$24,000 + $6,000 = $30,000
The estimated total annual occupancy cost is therefore:
$90,000 + $30,000 = $120,000
That works out to an average of:
$120,000 ÷ 12 = $10,000 per month
So while the advertised base rent is $7,500 per month, the tenant’s estimated cost after taxes and insurance is about $10,000 per month.
Maintenance and other expenses could still apply depending on the lease.
Double Net Lease vs. Triple Net Lease
The main difference between a double net lease and a triple net lease is maintenance and operating expenses.
With a double net lease, the tenant generally pays property taxes and insurance in addition to base rent, while the landlord typically retains responsibility for building maintenance.
With a triple net lease, the tenant generally pays property taxes, insurance, and maintenance or operating expenses.
Here’s a simplified comparison:
| Feature | Double Net Lease | Triple Net Lease |
|---|---|---|
| Base rent | Tenant pays | Tenant pays |
| Property taxes | Usually tenant pays | Usually tenant pays |
| Property insurance | Usually tenant pays | Usually tenant pays |
| Building maintenance | Usually landlord pays | Often tenant pays |
| Operating expenses | Depends on lease | Often tenant pays |
| Tenant expense exposure | Moderate | Generally higher |
The exact terms can vary, so this table should be viewed as a general comparison rather than a description of every commercial lease.
Double Net Lease vs. Gross Lease
A gross lease generally places more property expenses on the landlord.
The tenant typically pays an agreed rental amount, while the landlord handles many of the property’s operating expenses.
A double net lease shifts two major expenses to the tenant: property taxes and insurance.
This means a double net lease generally sits between a gross lease and a triple net lease in terms of how many property expenses are passed to the tenant.
| Feature | Gross Lease | Double Net Lease | Triple Net Lease |
|---|---|---|---|
| Base rent | Tenant pays | Tenant pays | Tenant pays |
| Property taxes | Usually landlord | Usually tenant | Usually tenant |
| Insurance | Usually landlord | Usually tenant | Usually tenant |
| Maintenance | Usually landlord | Usually landlord | Often tenant |
| Expense exposure for tenant | Lower | Moderate | Higher |
Actual lease provisions can differ, particularly with modified gross and other negotiated commercial leases.
Why Would a Landlord Use a Double Net Lease?
A double net lease allows a landlord to transfer some property expenses to the tenant without shifting as much responsibility as a triple net lease.
The landlord may still handle maintenance and repairs while the tenant takes responsibility for property taxes and insurance.
This can create a division of responsibilities that works well for certain properties and tenants.
It can also make the landlord’s rental income less exposed to changes in property taxes and insurance costs, depending on the lease structure.
Why Would a Tenant Choose a Double Net Lease?
A double net lease may appeal to a tenant who wants some of the cost structure of a net lease without taking on as many maintenance responsibilities as a typical triple net arrangement.
For example, a business might prefer knowing that the landlord remains responsible for major building maintenance while the tenant handles taxes and insurance.
However, the trade-off is that the tenant has less control over some property expenses and may still face increases in taxes or insurance premiums.
The key is to understand whether the total cost and responsibilities fit the business’s budget.
What Are the Advantages of a Double Net Lease?
A double net lease can offer benefits to both parties.
More Predictable Maintenance Responsibilities
Because the landlord generally retains responsibility for building maintenance, the tenant may have less exposure to certain repair costs than under a triple net lease.
That can make budgeting easier.
It doesn’t eliminate maintenance-related questions, though. The lease should clearly state who handles routine repairs, major repairs, and replacements.
Lower Base Rent Than Some Gross Leases
Because the tenant is taking responsibility for property taxes and insurance, the base rent may be lower than it would be under a comparable gross lease.
But don’t assume the total cost is lower.
The tenant should compare base rent plus all additional expenses.
Shared Financial Responsibility
A double net lease divides certain property costs between the landlord and tenant.
The tenant takes on taxes and insurance, while the landlord generally retains more responsibility for the physical property.
This can create a compromise between the two parties.
What Are the Risks of a Double Net Lease?
A double net lease still comes with financial risks for tenants.
Property Taxes Can Increase
Property taxes aren’t necessarily fixed throughout the lease term.
If taxes rise, the tenant’s expenses may rise too.
This is particularly important for long-term leases.
Insurance Costs Can Change
Insurance premiums can also increase.
A tenant should understand whether the lease allows the landlord to pass through all insurance costs or only certain expenses.
Maintenance Terms May Be Unclear
A double net lease doesn’t automatically mean the landlord pays for every repair.
A tenant could still have responsibility for certain maintenance, interior repairs, utilities, or other costs.
The lease should make these responsibilities clear.
Base Rent Can Hide the Real Cost
A property advertised at $5,000 per month may cost substantially more after taxes, insurance, utilities, maintenance, and other charges are included.
Always calculate the expected total occupancy cost.
What Should You Check Before Signing a Double Net Lease?
Don’t stop at the monthly base rent.
Review the lease carefully and identify every expense that could become your responsibility.
Pay particular attention to:
- Property tax payments
- Insurance requirements
- Maintenance responsibilities
- Repair obligations
- Major replacement responsibilities
- Utilities
- Common-area expenses
- Expense increases
- How taxes are allocated
- How insurance costs are calculated
- Renewal terms
- Security deposit requirements
- Assignment and subleasing provisions
- Early termination provisions
If the property is part of a larger building, also ask how shared expenses are divided among tenants.
Questions to Ask Before Signing
A few direct questions can help uncover the real cost of a double net lease.
What were the property’s property taxes last year?
What did the landlord pay for insurance during the previous year?
How have those costs changed in recent years?
Which maintenance expenses remain the landlord’s responsibility?
Who pays for major repairs and replacements?
Are there any common-area maintenance charges?
Can property taxes or insurance costs be passed through without a limit?
How are shared expenses calculated?
Can you review historical tax and insurance bills?
Getting clear answers before signing can prevent unpleasant surprises later.
Common Double Net Lease Mistakes
Looking Only at Base Rent
The advertised rent is only one part of the cost.
Add estimated property taxes and insurance before comparing the property with another commercial space.
Assuming “Double Net” Means the Same Thing Everywhere
Lease terminology describes a general structure, not every detail of the agreement.
The actual contract determines the tenant’s responsibilities.
Ignoring Tax Increases
Property taxes can change during a long lease.
Ask whether the tenant is responsible for the full increase and how tax adjustments are handled.
Overlooking Insurance Requirements
Don’t assume the insurance cost shown today will remain the same.
Also check what coverage the lease requires and whether the tenant must maintain additional insurance for its own business.
Not Clarifying Repairs
This can be a costly mistake.
Ask specifically about the roof, HVAC system, plumbing, electrical systems, structure, parking areas, and other major components that apply to the property.
Is a Double Net Lease Right for You?
A double net lease may be suitable for a tenant who is comfortable paying property taxes and insurance but wants the landlord to retain more responsibility for building maintenance.
It may also work well when the tenant wants a net lease structure without taking on as many operating expenses as would typically be associated with a triple net lease.
But the right choice depends on the property and the actual contract.
A newer building may have different maintenance risks from an older building. A standalone property may have a different expense structure from a multi-tenant building.
Don’t ask only whether a double net lease is good or bad.
Ask whether the specific rent, expenses, repair obligations, and other terms make sense for your business.
The Bottom Line
A double net lease, or NN lease, is a commercial lease where the tenant generally pays base rent plus property taxes and property insurance.
The landlord typically remains responsible for building maintenance, although the exact division of expenses depends on the lease.
The important point is that “double net” doesn’t tell you everything you need to know.
Before signing, calculate the full expected occupancy cost and review exactly who is responsible for taxes, insurance, maintenance, repairs, and major replacements. If the lease involves significant financial obligations, consider having a qualified commercial real estate attorney review the agreement.
The simplest way to evaluate a double net lease is to look beyond the advertised rent and understand the complete financial responsibility you’re agreeing to.