The most extreme form of net lease, where the tenant assumes virtually all financial obligations for the property, including structural repairs, roof replacement, and capital expenditures, with no right to rent abatement under any circumstances.
A bondable or absolute net lease transfers all property-related expenses and risks to the tenant, including structural maintenance, capital expenditures, insurance, taxes, and even condemnation and casualty risks. The tenant cannot terminate the lease or abate rent regardless of circumstances (including property damage or partial condemnation). The term "bondable" comes from the fact that the landlord's income stream is so predictable it can be used as collateral for bond financing. These leases are typically long-term (15 to 25 years) and involve creditworthy corporate tenants.
A tenant signs a bondable lease without understanding the full scope. When the roof fails five years in, the tenant faces a $500,000 replacement cost that is entirely its responsibility. The lease provides no right to reduce rent or terminate, regardless of the financial burden.
Bondable leases are appropriate only if you have the financial capacity to absorb major capital expenditures. Before signing, get building condition assessments for the roof, HVAC, and structure. Factor potential capital costs into your total occupancy cost analysis.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
