NNN leases pass every operating cost to the tenant, creating dozens of potential overcharge points. Gross leases bundle costs into rent for simplicity but sacrifice transparency.
A triple net lease requires the tenant to pay base rent plus a proportionate share of property taxes, insurance, and common area maintenance expenses. The landlord passes through actual operating costs, making the tenant responsible for nearly all variable property expenses.
A gross lease bundles base rent and all operating expenses into a single flat monthly payment. The landlord absorbs property taxes, insurance, and maintenance costs within the quoted rent amount, giving the tenant cost predictability.
| Dimension | NNN (Triple Net) Lease | Gross Lease |
|---|---|---|
| Who pays operating expenses | Tenant pays proportionate share | Landlord absorbs into rent |
| Monthly cost predictability | Variable, changes annually | Fixed, known in advance |
| CAM audit relevance | High, every line item can be audited | Low, expenses are bundled |
| Risk of overcharges | High, each pass-through is a potential error | Low, but landlord may overestimate in the rent |
| Common property types | Retail, industrial, standalone | Office, coworking, small-suite retail |
NNN leases create the most audit opportunity because every operating expense category is passed through individually. Each line item on the reconciliation statement can contain calculation errors, excluded charges billed to tenants, or management fee overcharges. Gross leases largely remove the CAM audit use case because the tenant never sees itemized expenses.
NNN leases expose tenants to significantly more overcharge risk. Because the landlord passes through dozens of individual line items, there are more places for errors, inflated costs, and prohibited charges to hide. Without regular audits, NNN tenants routinely overpay by 5-15% on their annual reconciliation.
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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.
