A triple net lease (often written as NNN) is a commercial lease structure where the tenant pays the base rent plus three major categories of property expenses: property taxes, property insurance, and common area maintenance (CAM). Because of that, many people describe NNN leases as passive for landlords.
In reality, a landlord can still have meaningful costs and responsibilities in a triple net lease. The difference is that many of the building’s operating expenses are reimbursed by the tenant (directly or through monthly estimates and annual reconciliations). What the landlord ultimately pays depends on the lease language, the property type, and what expenses are non-recoverable.
What NNN stands for (and what the tenant usually pays)
In a typical NNN lease, the tenant pays:
- N: Property taxes (real estate taxes and sometimes special assessments, depending on the lease)
- N: Property insurance (building/property insurance premiums; sometimes landlord’s liability policy components)
- N: CAM / operating expenses (repairs, maintenance, and shared-area costs)
The tenant also usually pays for:
- Utilities (electric, gas, water, trash)
- Janitorial (especially in single-tenant retail)
- Interior maintenance (often including HVAC service, depending on the lease)
The short answer: what does the landlord pay in a triple net lease?
Even in a NNN lease, landlords commonly pay for some combination of:
- Mortgage debt service (principal and interest)
- Capital expenditures (CapEx) not defined as recoverable CAM (roof replacement, structural repairs, major parking lot replacement)
- Leasing costs (broker commissions, tenant improvements, legal fees)
- Property management (sometimes reimbursable, sometimes not, sometimes capped)
- Accounting and administration (CAM reconciliations, audits, software)
- Vacancy costs (when the space is empty, the landlord pays everything)
- Non-recoverable expenses excluded by the lease (marketing, certain legal costs, certain repairs)
The key is this: NNN shifts many operating expenses to the tenant, but it does not eliminate landlord risk. It changes where the risk shows up.
Expense categories: who pays what in a typical NNN lease
Below is a practical breakdown of the most common expense categories and how they are handled.
1) Property taxes
What the tenant usually pays
- Real estate property taxes billed by the county/city
- Sometimes special assessments (depending on lease language)
What the landlord may still pay
- Taxes during vacancy
- Increases that are excluded (some leases have base year structures or caps)
- Costs to appeal assessments (sometimes recoverable, sometimes not)
Watch-outs
- Base year vs pro rata structures can change the economics
- Some tenants negotiate exclusions for extraordinary assessments
2) Property insurance
What the tenant usually pays
- Building insurance premiums (often reimbursed to the landlord)
- Sometimes the tenants share of umbrella coverage, depending on the lease
What the landlord may still pay
- Insurance deductibles (sometimes recoverable, sometimes not)
- Coverage gaps if the tenant is required to carry certain policies but does not comply
- Premium increases that exceed caps (if caps exist)
Watch-outs
- The lease should clearly require the tenant to carry appropriate liability insurance and name the landlord as additional insured
- The landlord should still monitor certificates of insurance and renewal dates
3) CAM / operating expenses
CAM is where most confusion happens. CAM can include routine maintenance and shared-area costs, but it is not always the same thing as major replacements.
What the tenant usually pays
Depending on the property:
- Landscaping and snow removal
- Parking lot sweeping and striping (sometimes)
- Lighting for common areas
- Trash removal for common areas
- Security and monitoring
- Routine repairs and maintenance
- Property management fees (sometimes reimbursable, often capped)
What the landlord may still pay
- Non-recoverable CAM exclusions in the lease
- Costs above any negotiated CAM cap
- Administrative time and accounting to track and reconcile CAM
Watch-outs
- CAM definitions vary widely. Two NNN leases can be completely different.
- Tenants often negotiate exclusions for capital items, marketing, and landlord overhead.
4) Repairs and maintenance: what counts as operating vs capital
A common dividing line is:
- Repairs/maintenance (often recoverable): fixing what is broken, servicing equipment, minor patching
- Capital expenditures (often landlord responsibility): replacing major systems or structural components
But the lease can override the rule of thumb.
Items tenants often pay (especially in single-tenant NNN)
- HVAC maintenance and sometimes replacement (if explicitly stated)
- Plumbing repairs within the premises
- Electrical within the premises
- Interior walls, floors, and fixtures
Items landlords often pay
- Roof replacement (unless the lease pushes it to the tenant)
- Structural repairs (foundation, load-bearing walls)
- Major parking lot replacement
- Building envelope issues
Watch-outs
- Some leases allow landlords to pass through capital expenditures via amortization (for example, a roof replacement amortized over its useful life and included in CAM)
5) Utilities
In many NNN structures, the tenant pays utilities directly.
What the landlord may still pay
- Common-area utilities in multi-tenant buildings (then billed back through CAM)
- Utilities during vacancy
6) Property management and administration
Even when tenants reimburse expenses, someone has to run the building.
What the tenant may pay
- Property management fees as part of CAM (often capped)
- Administrative fees (sometimes a fixed percentage of CAM)
What the landlord may still pay
- Any portion above caps
- Internal overhead that is excluded
- Time and cost to prepare annual reconciliations
7) Leasing, legal, and transaction costs
These are often landlord costs and can be significant.
Landlords commonly pay:
- Broker commissions
- Legal fees for lease drafting and negotiation
- Tenant improvement (TI) allowances (especially in office and some retail)
- Buildout costs that are not reimbursed
- Marketing and signage (depending on property type)
Some leases allow limited recovery of certain legal fees (for example, enforcement or collection), but not all.
8) Capital expenditures (CapEx) and reserves
This is the big one. A property can look like a clean NNN deal until a roof, parking lot, or structural issue shows up.
Landlords often pay:
- Roof replacement
- Structural repairs
- Major mechanical replacements unless the lease shifts them
- Parking lot resurfacing or replacement
- Code compliance upgrades (depending on the lease)
Some landlords build reserves or negotiate lease language to amortize and pass through certain capital items.
9) Vacancy and downtime costs
NNN is only NNN when the space is occupied.
When a unit is vacant, the landlord typically pays:
- Taxes
- Insurance
- Utilities (at least minimum service)
- Security
- Maintenance to keep the property marketable
This is why tenant quality and lease term matter so much.
10) Common NNN variations that change what the landlord pays
Not every NNN lease is truly absolute.
NNN vs absolute NNN
- NNN: tenant pays taxes, insurance, CAM, but landlord may still handle certain structural items or capital replacements
- Absolute NNN: tenant pays almost everything, sometimes including roof and structure, and the landlords role is closer to collecting rent
Modified gross leases
Some NNN listings are really modified gross structures where the landlord pays some expenses and the tenant pays increases over a base year.
Multi-tenant vs single-tenant
- Single-tenant NNN: tenant often takes on more responsibilities (sometimes including HVAC and even roof/structure in absolute NNN)
- Multi-tenant NNN: landlord often manages the property and bills tenants their pro rata share through CAM, with more exclusions and caps
A simple checklist: questions to ask before you assume the landlord pays nothing
Before buying or signing a NNN lease, ask:
- Is this NNN or absolute NNN?
- Are roof and structure landlord responsibilities, tenant responsibilities, or amortized and passed through?
- What is included in CAM, and what is excluded?
- Are there CAM caps, management fee caps, or admin fee limits?
- How are taxes and insurance billed (direct vs reimbursement), and how are increases handled?
- Who maintains and replaces HVAC?
- What happens during vacancy, and what are the landlords carrying costs?
- Are there any major deferred maintenance items that will become landlord CapEx?
AAOL member tip: treat NNN as a contract, not a buzzword
The words triple net do not guarantee low responsibility. The lease language does.
If you are evaluating a NNN deal, build a one-page summary of:
- Recoverable vs non-recoverable expenses
- CapEx responsibilities
- CAM caps and exclusions
- Insurance requirements and certificates
- Renewal options and rent escalations
For landlord-first templates, deal checklists, and practical risk-reduction guidance, join AAOL here: https://aaol.org/subscription-plan/
Legal disclaimer
This guide is for general educational information only and does not constitute legal, tax, or financial advice. Commercial lease terms vary widely and are heavily negotiated. Laws and local practices differ by state and market. For advice on a specific lease or property, consult a qualified commercial real estate attorney and a licensed tax professional.
