SINGLE NET LEASE

Contact Neufeld Legal for commercial leasing legal matters at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

A Single Net Lease, often simply referred to as an "N" lease, is one of the foundational structures used in commercial real estate to allocate the burden of property operating expenses between the landlord (lessor) and the tenant (lessee). It represents an intermediate step between the most landlord-favorable lease type (Triple Net Lease) and the most tenant-favorable (Gross Lease).

In a Single Net Lease, the tenant is responsible for paying two components:

• Base Rent: The fixed monthly or annual rent agreed upon in the lease contract.

• Property Taxes (The Single "N"): The tenant must pay a proportionate share of the property's real estate taxes. If the tenant occupies 50% of the building, they typically pay 50% of the property tax bill.

Landlord Responsibilities: The key defining feature of the Single Net lease is that the landlord retains financial and administrative responsibility for the remaining two primary categories of operating expenses:

• Property Insurance: The cost of insuring the building structure.

• Common Area Maintenance (CAM) / Operating Expenses: Costs related to the upkeep of the common areas, HVAC, roof, foundation, and non-structural repairs.

Implications for Landlord/Investor and Tenant

For the Landlord/Investor: The Single Net lease provides the landlord with some protection against increasing property taxes, which are generally unpredictable. However, the landlord retains significant risk and responsibility for the ongoing maintenance and repair of the physical structure, as well as the volatility of insurance premiums. This lease type is therefore less popular with institutional investors seeking truly passive income (who prefer NNN leases).

For the Tenant: Tenants benefit from having a clearer, simpler expense structure than a Double or Triple Net Lease. They only have to budget for one major unpredictable expense (taxes), while the landlord manages the potentially high costs and administrative headaches associated with building maintenance and insurance claims. This structure is often found in multi-tenant office or industrial buildings where tenants are expected to cover their proportional tax burden but are not equipped or required to manage the building's physical maintenance.

For knowledgeable and experienced legal representation in negotiating, reviewing and drafting lease agreements, and protecting your business’ legal rights thereunder, contact lease lawyer Christopher Neufeld at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com.