In a net lease, what additional costs does the tenant typically cover?

In a net lease, the tenant typically takes on additional responsibilities beyond just paying rent. This can include covering property taxes, insurance premiums, and utility costs, which distinguishes it from a gross lease, where the landlord retains those financial responsibilities.

Specifically, under a net lease, the tenant agrees to pay for certain expenses that relate directly to the property's upkeep and operation. By doing this, the landlord can provide a lower base rent, knowing that the tenant will handle these costs directly. As a result, the tenant has a vested interest in maintaining the property and managing its operating expenses efficiently.

Understanding the components of a net lease is essential in property management, as it helps both landlords and tenants to clearly delineate financial responsibilities within a rental agreement.