Property Management
In commercial property management, how does a gross lease differ from a triple net (NNN) lease?
AA gross lease is only legally valid for residential rental properties in Pennsylvania
BUnder a gross lease, the landlord pays most operating expenses from rent received; under a NNN lease, the tenant pays base rent plus taxes, insurance, and maintenance✓ Correct
CA gross lease always has a higher base rent than a NNN lease by legal definition
DTriple net leases are prohibited in Pennsylvania for properties under 5,000 square feet
Explanation
In a gross lease, the landlord pays property taxes, insurance, and maintenance from the rent collected; the tenant pays one all-inclusive amount. In a triple net (NNN) lease, the tenant pays base rent plus all three major operating expense categories: property taxes, building insurance, and maintenance and repairs. NNN leases are common for freestanding retail properties, industrial buildings, and single-tenant commercial properties throughout Pennsylvania. Property managers must understand these structures to properly advise clients.
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