In a double net lease, the tenant is responsible for property taxes, insurance premiums, and base rent on the space. These costs are paid directly to the landlord as the property is still in the landlord’s name. In return, the landlord is responsible for structural maintenance on the space.
However, this isn’t a hard and fast rule as certain responsibilities can be allocated to either the landlord or the tenant depending on what is negotiated in the lease.
A great example of this is in relation to HVAC. The tenant is usually responsible for the maintenance of the HVAC system unless there is need for a replacement which responsibility, especially if late in the lease term, would usually then fall to the landlord.
As a landlord, a double net lease offers an opportunity to pass on additional financial responsibilities on to the tenant. Passing property taxes and insurance premiums onto a tenant along with the base rent allows landlord’s greater control over their expenses.
As a renter, a double net lease typically means additional costs being passed on to you by the landlord. While base rent may remain a fixed cost over the duration of a lease, insurance premiums and property taxes can shift during a leasing period. This variable code can add a level of uncertainty to a renter’s financial planning.