LEASE INSPECTIONS by a Certified Site Assessment Professional:
In a triple net lease, the Lessee (tenant) pays the Lessor (landlord) rent, taxes, insurance, and the Lessee’s share of maintenance expenses for the property. While the rent is mutually established upfront and the projected cost for taxes and insurance can be reasonably estimated based on current costs, estimating and budgeting for future maintenance costs can be difficult without knowing the condition of the building and its components.
Include the evaluation of all major components in a building, which establishes the components’ current condition, remaining design life, and any immediate and future repairs that are necessary. This type of inspection includes the evaluation of the following components:
- Structure – concrete, steel and wood components
- Roof system -- surface material, condition, age and remaining useful life
- Building envelope – roof and sidewalls including windows and doors
- Interior finishes – floors, walls and ceilings
- Heating, ventilation and air conditioning
- Electrical system and components
- Plumbing system and fixtures
- Fire suppression and life safety systems
- Hardscape - walks, roadways, drives, parking areas
- Storm water drainage
Some advantages of a third-party pre-lease inspection for the Lessor:
- Let us help you avoid the cost and headaches of potential disputes and litigation by objectively documenting the property's condition prior to occupancy.
- Verification that components are functioning and suitable for intended use.
- Knowing the condition of the property and its components prior to occupancy could protect Lessee from assuming liability associated with existing defects or premature failure of components.
- Understanding long-term maintenance requirements and related costs can be useful for budgeting purposes in NNN leases.
- Establishing a baseline condition for the property prior to leasing may help owners recover costs for damages incurred during occupancy.
- Property condition assessment can help owners understand and set/monitor maintenance guidelines expected of tenant in NNN lease.
What is a NNN Lease Agreement?
In United States real estate business, "Net Lease" is a term used to signify a lease structure in which the tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent. Real estate related expenses associated with ownership are divided into three categories referred to as the three nets which are property taxes, insurance, and maintenance. The rent collected under a net lease is net of expenses. It therefore tends to be lower than, for instance, rent charged under a gross lease. Net lease types include single net, double net, triple net and even bondable triple net leases. The term "net lease" is often used as a shorthand expression when referring to NNN leases.
An NNN Lease is a net lease, structured as a turnkey investment property in which the tenant is responsible for paying the three major expenses associated with commercial real estate ownership "NNN" stands for "Net-Net-Net", is pronounced "Triple Net" and represents the three most common, consequential real estate related expenses:
The rent the landlord receives from the tenant is in effect net of expenses
Fees are based on size and complexity.
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