Re: Net-Net-Net Lease

Steve:
 
Black's Law Dictionary (8th ed. 2004) at 908 defines net-net-net lease
as follows: A lease in which the lesee pays all the expenses, including
mortgage interest and amortization, lease the lessor with an amount free
of all claims. -- Also termed triple-net lease.
 
I suspect few leases use the above definition.
 
Arnie
Arnold B. Kogan
Goldberg Katzman, PC
320E Market Street, 3rd Floor
Harrisburg, PA 17101-2225
Phone: (717) 234-4161, Ext. 3159
FAX: (717) 234-6808
Email: abk_at_goldbergkatzman.com
 
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-----Original Message-----
From: realproperty-bounce_at_list.pabar.org
[mailto:realproperty-bounce_at_list.pabar.org] On Behalf Of Steven J.
Proctor
Sent: Tuesday, May 23, 2006 2:36 PM
To: Pa Bar Assoc Real Property List
Subject: [realproperty] Net-Net-Net Lease

Anyone have a definitive interpretation of the term "Net-Net-Net Lease"?
We're dealing with an old Form 50 commercial lease for a store in a
shopping center, which has typed in a space near the end thereof "This
is a Net-Net-Net Lease." The term is not otherwise used or defined in
the lease, nor is there any type of CAM provision spelling out what
percentage of the total square footage in the center is allocable to the
store, or any other sort of formula for allocating common expenses to
the leased premises.
 
However, this being a Form 50 lease, there is also the preprinted
language on the first page requiring the tenant to pay increases in
taxes and water/sewer rents over the base year amounts, and increases in
insurance premiums IF due to the tenant's activities. Normally a typed
provision might trump a conflicting preprinted provision, BUT the
preprinted provisions were manually modified by striking out selected
portions thereof. It's clear the parties didn't gloss over preprinted
boilerplate, but I'm not sure how the modified preprinted provisions can
be reconciled with the typed provision.
 
Another factor which may have a bearing on the interpretation of the
lease is the fact that the lease with our tenant client was signed by
the previous owner as landlord, and he never billed for anything other
than the base rent, never even asking for a portion of increased taxes
and utilities under the preprinted portions of the lease. However, after
several years he sold to the present landlord, who claims the
"Net-Net-Net" provision governs, and each tenant owes a percentage
(calculated by him) of ALL the taxes, insurance, utilities, maintenance,
etc. An eviction notice has just been served on our client for failure
to pay the amounts claimed by the new landlord.
 
We've all heard the term "triple net" (which may or may not be the
equivalent of "Net-Net-Net"), but I've never seen a lease just use the
term and let it go at that, without further defining the concept. Any
thoughts on what the new landlord is legitimately entitled to in this
situation? TIA.
 
Steve
 
Steven J. Proctor, Esq.
Binder, Kalis & Proctor, P.C.
1035 E. High St.
Pottstown PA 19464
610-323-6200
Fax 610-970-2082

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Received on Tue May 23 2006 - 13:49:29 PDT