NNN lease tenant payments, does tenant pay insurance, tax and association fees monthly? Or do they pay the full amount when the invoices are due?
My question is what association dues are due on a commercial property? There can be commercial properties in a project that may be subject to association dues, but that is a rather rare arrangement. Might have a restaurant in a development.
Your tenant has to have the ability to capitalize improvements and repairs, in other words being a business entity.
Usually maintenance expenses, taxes and insurance under a net lease are due and payable as the expense arises or becomes due, they aren't "escrowed" like taxes and insurance would be with a mortgage. :)
Updated almost 4 years ago
Not post worthy, why was I thinking of mixed use and not the owned units? Very common, always done.
Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com
Hi Bill, association in a shopping plaza in which has several owners, each owning their own parcel within the plaza. The monthly dues cover certain common area expenses.
@Martin Z. The answer to that, is it works however the landlord has structured the lease and terms. Which position are you in? Anything that would impact you such as association dues, taxes, etc are best paid by the landlord and billed to the tenant so you can make sure they're getting paid. Does that answer your question?
Typically NNN Charges are estimates based the properties current year budget, and in most cases are billed/paid monthly and reconciled at the end of the year.
I am the landlord on a NNN lease to a national tenant. In the Fall of every year, I send the tenant an estimate of my costs for the property: property taxes, insurance, garbage, CAM, and periodic repairs. I add that amount to the tenant's lease payment. In the Spring of every year, I give the tenant a reconciliation of my prior year's expenses. If they overpaid on my expenses, I send them a check. If they underpaid my expenses, they send me a check.
I pay the bills when they come due but I pass along those costs to the tenant in the form of 12 monthly lease payments.
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