Everything You Need to Know About Net Leases

The term net lease refers to a contractual agreement where, in addition to rent, a lessee pays a portion or all of the taxes, insurance fees, and maintenance costs for a property. Net leases are commonly used in commercial real estate. In the purest form of a net lease, the tenant is expected to pay for all the costs related to a piece of property as if the tenant were the actual owner. They are lease agreements between landlords and tenants where the tenant pays rent and any other costs associated with the property in question. The agreement may include one or more expenses including insurance, property taxes, utilities, maintenance and repairs, and other operational costs. Most landlords generally accept lower rent payments because of the additional costs associated with net leases.