Does This Lease Clause Mean That The Tenant Pays The Taxes?

Question

Nathan Gesner · Answer

"Tenant shall pay Landlord..."I'm going out on a limb here and saying this requires the Tenant to pay the Landlord.

David M. · Answer

@Bill Brandt

OP starts off with "The lease is for commercial use by a medical tenant."

Jameson Sullivan · Answer

Short answer is yes. This is some form of net lease where the tenant pays for their pro-rate share of op-ex, taxes and insurance...However, there's a lot of information missing here. This clause does seem to indicate they would pay 100% of their pro-rata share of the taxes, but is it a single tenant property? If not, then they would only be responsible for their piece of the taxes and it's possible there's other leases in the property that are not NNN. We would also need to understand a little better how they define everything "hereinafter"

Unfortunately what @Bill Brandt is saying is NOT true. NNN leases can vary from lease to lease. Most NNN leases do cover most operating expenses and sometimes a reserve account but also regularly exclude cap-ex, advertising for the larger shopping center, etc... When the LL's responsibilities get more and more, the lease would be considered double net or even single net... Anyways, this is such a detailed topic and there's too much to write in this post. Happy to hop on a call with anyone to talk about it.

David M. · Answer

@Bill Brandt

But we haven't seen the rest of the lease to know if its single, double, or triple net...

Bill B. · Answer

As a commercial lease it actually includes a lot more. I’ve been a commercial tenant. It means you can replace the and re-stripe the parking lot and charge each tenant based on their SF as a percent of the total sf rented. New facades for the building, new giant signs advertising the mall, etc.

As a NNN landlord you should have zero property related expenses if all possible SF are rented out.

Bill B. · Answer

That has to be a commercial lease. After all you could ask your tenant to pay any expenses you have in regards to this property. Not just property taxes but your insurance at least but maybe bookkeeping? Property management?

I’m going to say either this is a commercial lease or someone copied a commercial lease for their residential lease not knowing any better.

David M. · Answer

@William Coet

Sounds like it. Maybe its some sort of net lease...

Does This Lease Clause Mean That The Tenant Pays The Taxes?

Does This Lease Clause Mean That The Tenant Pays The Taxes?

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