Property Management
A property manager who manages commercial properties under a 'triple net' (NNN) lease structure should ensure that the lease clearly:
AExcludes all tenant responsibilities for the property
BSpecifies which operating costs (taxes, insurance, maintenance) the tenant is responsible for and how costs will be calculated and reconciled✓ Correct
CGuarantees the landlord will cover any cost overruns
DProvides that the tenant pays only a percentage of gross sales
Explanation
NNN lease management requires clear documentation of which operating costs the tenant pays, how shared costs in multi-tenant buildings are allocated (often by pro-rata share of rentable area), and how annual reconciliations of estimated versus actual costs will be conducted. Ambiguity in NNN leases often leads to disputes.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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