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The primary risk of a triple net lease for a landlord

On Behalf of | Oct 10, 2018 | Landlord / Tenant |

Renting out commercial space can be a profitable venture for California entrepreneurs. As part of the leasing process, a landlord will need to choose the type of lease to use. When choosing a triple net lease, it would be a good idea to make sure that certain protections for the property owner are built into the agreement.

Owning a building comes with certain expenses and upkeep. Landlords often pass on some of the expenses such as maintenance, taxes and insurance to tenants through a triple net lease. This may seem like a good deal for the property owner, but it depends on the circumstances. With several tenants, the expenses are distributed among the tenants, as is the responsibility.

However, when there is only one tenant, the property could fall into disrepair and the bills may not get paid. When there are several tenants, if one fails to live up to the obligations in the lease, it may not have as much effect on the property owner. The issue may be handled with a minimum of disturbance or destruction to the property. In any case, it may be a good idea to include some provisions in the lease to ensure that each tenant abides by the terms of the lease.

A California landlord could include provisions in the lease for periodic inspections to be sure that maintenance and repairs are being made in accordance with the lease. This could prevent the tenant from neglecting the property during the term of the lease. This is just one area where a landlord may want to work certain protections into the lease to make sure that the property remains the investment that he or she intended it to be.