Key Elements Every Dealership or Commercial Absolute NNN Lease Should Contain
As a professional dealership and NNN landlords, we at Legacy often encounter questions about what should go into a solid Commercial NNN Lease (Triple Net Lease). Whether you’re a dealership landlord or tenant, ensuring clarity and comprehensive terms are essential for a smooth lease agreement.
What is an Absolute NNN Lease?
- Definition: Tenant assumes all responsibilities—property taxes, insurance, maintenance, and even major structural repairs.
- Benefits for Landlords: Truly passive income with no management involvement.
- Benefits for Tenants: Maximize property value in a sale. Full control over property operations and improvements – including image complains.
Tenant’s Responsibilities:
- Taxes: 100% responsibility for property taxes, including any increases.
- Insurance: Full coverage for liability and property insurance.
- Maintenance & Repairs: From routine upkeep to structural components (roof, foundation, HVAC).
- Capital Improvements: Clarify whether long-term upgrades or replacements fall under the tenant’s scope.
- Financial Reporting: Report Financial annually to landlord.
Landlord’s Role (Minimal):
- Ownership Only: Typically limited to collecting rent and retaining title to the property.
- Lease Monitoring: Ensuring tenant compliance with agreed terms, such as insurance coverage.
- Exit or Disposition Planning: Landlords may have responsibilities tied to property sale or lease transfer.
Additional Key Provisions:
- Assignment/Subletting: Define tenant flexibility in transferring the lease.
- Default Clauses: Remedies for non-payment or non-compliance.
- Termination & Renewal: Ensure clarity on end-of-lease procedures and options.
- Dispute Resolution: Arbitration or mediation to address disagreements efficiently.
Do Not Include:
The following items create sale, financing, an tax issues for both Landlord and Tenant:
- Purchase Options
- Right of First Refusal(s)
If you are interested in learning more about how Legacy can support your next project, please contact:
AUSTIN WOLFINGTON
610.304.9347 • Austin@legacyautocapital.com
TODD MARCELLE
914.671.8871 • Todd@legacyautocapital.com
