A triple net (NNN) lease is a commercial lease structure where the tenant pays base rent plus its full proportionate share of property tax, building insurance and common area maintenance costs as additional rent — the most common structure in Canadian standalone retail, industrial and anchor-tenant real estate.
Treadstonelaw.ca sets out the standard grading of net structures, with triple net at the top: single net covers base rent plus property taxes, double net adds insurance, and triple net adds taxes, insurance and CAM/operating costs on top of base rent, and describes triple net as the most common structure in Canadian commercial real estate, particularly for standalone retail buildings, industrial units and anchor tenancies. Québec’s commercial leases run under the civil law of the Civil Code of Québec rather than the common-law lease framework the rest of this page describes, so the same NNN pricing convention applies but the underlying legal mechanics differ.
Buying a building that’s already leased NNN transfers real, ongoing work to the new owner. A treadstonelaw.ca breakdown for Ontario notes the buyer takes on actually paying the property taxes, arranging building insurance, maintaining the common areas, billing tenants for their proportionate shares, and running the year-end reconciliation comparing estimated charges to actual costs — and flags that last piece, the annual reconciliation, as the obligation that trips up new owners because of its administrative complexity. On a mid-year purchase, the agreement of purchase and sale should say how the seller’s and buyer’s shares of that year’s collections and costs get divided.
GST/HST applies on top of both parts of the rent. A treadstonelaw.ca guide to Ontario commercial leases confirms commercial rent in Ontario is HST-taxable, unlike residential rent, and that the tax generally follows the full economic substance of what the tenant pays for occupying the space, not just the number labelled base rent — meaning the CAM, tax and insurance components of an NNN structure are taxed the same way base rent is. The federal component is fixed by statute: the Excise Tax Act sets GST at the rate of 5% under section 165(1); where HST applies, the provincial component is set by regulation and varies by province rather than sitting at one national rate.
An industrial tenant signs an NNN lease at $9/sq ft base rent on 10,000 sq ft, or $90,000 a year, plus its share of property tax ($1.80/sq ft), insurance ($0.30/sq ft) and CAM ($1.40/sq ft) — $3.50/sq ft in additional rent, or $35,000 a year — for $125,000 a year total before GST/HST. When the building sells mid-year, the new owner takes over billing and collecting that $35,000 in additional rent and inherits the year-end reconciliation against actual costs; the purchase agreement needs to spell out how that $35,000 is split between the months each owner held the building.
See also: Gross lease vs net lease · CAM charges and what belongs in them · The CAM reconciliation at year end.
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