What type of lease typically assigns all utility and operating expenses to the tenant?

A triple net lease is a type of lease agreement in which the tenant is responsible for all operating expenses associated with the property. This includes property taxes, insurance, and maintenance costs, in addition to the base rent. This structure is commonly used in commercial real estate where the landlord seeks to minimize their financial obligations and pass on the costs directly to the tenant.

By design, this type of lease incentivizes the tenant to manage the property efficiently, as they bear the costs. In contrast, a full service lease typically encompasses most, if not all, operating expenses within the rent, while a modified gross lease may include some expenses in the rent and requires the tenant to cover others. A standard lease agreement does not specifically categorize the responsibilities regarding utilities and operating expenses, leading to variability in tenant obligations. Thus, the triple net lease stands out as the choice that assigns all utility and operating expenses directly to the tenant.