Who does repairs in NNN
In light industrial, say if HVAC broke, should the landlord repair? Or the tenant does and landlord doesn't need to know?
if landlord wants to have HVAC serviced every year, does tenant pay for it?
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@Sunil Annam
Read the lease - it will say. That’s the only answer someone can give
Typically though on a NNN lease tenant pays for repairs and is responsible for hvac. Landlord should not care about hvac system as it's not their system
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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A triple net lease should hold the tenant responsible for all maintenance. Check your lease for exclusions.
All comes down to the lease. And sometimes repairs such as those might not be super clear in the lease. Generally for repairs such as those, LL would do the repair, then bill back to the tenants as CAM. Or if it is a larger repair, might bill back right away.
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#3 Commercial Real Estate Investing Contributor
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Quote from @Eliott Elias:
A triple net lease should hold the tenant responsible for all maintenance. Check your lease for exclusions.
And LL responsible for capex.
Its a wonderfully blurry line, only lawyers can help you read it
Quote from @Ronald Rohde:
Quote from @Eliott Elias:
A triple net lease should hold the tenant responsible for all maintenance. Check your lease for exclusions.
And LL responsible for capex.
Its a wonderfully blurry line, only lawyers can help you read it
Right on! DETAILS, DETAILS, DETAILS. I have NOT seen many lease agreements obligating the tenant for capital expenditures, can remember truthfully. Also, some owners think dumping all expenses into CAM is the solution. And that depends on the lease agreement, are there caps on CAM expenses? READ THE LEASE.
The lease will spell it out.
If it's multi-tenant, you can put the servicing expense in the CAM. I would put together a maintenance contract for the HVAC. It may be LL responsibility but it's more likely that it is on the tenant, which they are responsible for the service/maintenance of the equipment. As the LL you will still want to make sure they are keeping their HVAC serviced because if they vacate, they might do so with a broken HVAC and the LL will likely have to fix it. In general, if the tenant is responsible for certain parts of the building, make sure they are fixing those items periodically. If/when they leave, you will want a well-functioning building not one that is going to cost an arm and a leg to get leased.
If the lease doesn't spell it out you may want to get an amendment or add the proper language to the next lease.
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#3 Commercial Real Estate Investing Contributor
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Quote from @Account Closed:
Quote from @Ronald Rohde:
Quote from @Eliott Elias:
A triple net lease should hold the tenant responsible for all maintenance. Check your lease for exclusions.
And LL responsible for capex.
Its a wonderfully blurry line, only lawyers can help you read it
Right on! DETAILS, DETAILS, DETAILS. I have NOT seen many lease agreements obligating the tenant for capital expenditures, can remember truthfully. Also, some owners think dumping all expenses into CAM is the solution. And that depends on the lease agreement, are there caps on CAM expenses? READ THE LEASE.
Its certainly possible for the tenant to pay capex, we routinely do that for 10 year or longer leases, it just depends.