A lease structure in which the tenant pays base rent plus three additional cost categories: real estate taxes, building insurance, and CAM/operating expenses. In a true NNN lease, tenants bear nearly all property costs beyond mortgage debt service.
NNN leases transfer maximum financial risk to the tenant. The "three nets" are property taxes, property insurance, and maintenance/CAM. Despite the name "NNN," lease language controls - there is no industry-standard definition of what expenses are included.
A retail tenant signed an NNN lease assuming they understood their obligations. The lease's CAM definition included management fees, administrative fees, reserves, and above-grade salaries - totaling 22% of operating costs - none of which the tenant expected to pay.
Never assume what NNN covers - read every expense definition in your lease. The 'three nets' are just a starting point. The actual financial exposure depends entirely on the lease's expense definitions, exclusions, and caps.
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Start Free AuditThis 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.