If you own commercial property in California, a triple net lease is the structure that turns your building into passive income, but only when the lease is drafted to actually shift the costs you think it shifts. A triple net lease in California makes the tenant pay base rent plus the property’s three main operating costs: property taxes, insurance, and maintenance. The distance between a strong NNN lease and a weak one is measured in the tens of thousands of dollars a year you either recover or absorb.
Borna Houman Law represents commercial property owners, landlords, and real estate investors across Los Angeles County, from Beverly Hills and Century City to Downtown and the South Bay. Commercial leasing in California gives owners far more freedom than residential, and a precise net lease is how you use it.
Key Takeaway: A triple net (NNN) lease in California requires the tenant to pay base rent plus property taxes, building insurance, and common area maintenance. California imposes no rent control or just-cause limits on commercial tenancies, so the lease document controls almost everything. The two clauses that decide whether an owner actually keeps the rent are the CAM definition and the assignment provision.
What is a triple net lease in California?
A triple net lease is a commercial lease where the tenant pays base rent plus the three nets: property taxes, property insurance, and common area maintenance. The owner receives rent that is closer to true net income, because the operating costs that usually erode a landlord’s return are passed through to the tenant.
Net leases sit on a spectrum. A single net lease passes through only taxes. A double net (NN) lease passes through taxes and insurance. A triple net lease adds maintenance. An absolute net lease goes further and makes the tenant responsible for everything, including the roof and structure. Where your lease falls on that spectrum decides what you pay for, and the labels are not standardized, so the text of the clause controls, not the name on the cover page.
What does the tenant actually pay under an NNN lease?
Under a true triple net lease, the tenant pays base rent and reimburses the owner for taxes, insurance, and maintenance, often as a monthly estimate that is reconciled once a year against actual costs. This table shows how the common net lease structures divide the costs.
| Lease type | Property taxes | Insurance | Maintenance / CAM | Roof and structure |
|---|---|---|---|---|
| Gross (full service) | Owner | Owner | Owner | Owner |
| Single net (N) | Tenant | Owner | Owner | Owner |
| Double net (NN) | Tenant | Tenant | Owner | Owner |
| Triple net (NNN) | Tenant | Tenant | Tenant | Owner (usually) |
| Absolute net | Tenant | Tenant | Tenant | Tenant |
A quote of $35 NNN means base rent of $35 per square foot per year, with the three nets charged on top. On a 4,000 square foot space, that is $140,000 in base rent before the tenant’s share of taxes, insurance, and CAM, which in many LA buildings adds another $8 to $15 per square foot.
What does a triple net lease not cover for the owner?
This is where owners lose money they assumed the lease protected. A standard NNN lease almost never shifts the owner’s own income tax, and most do not shift the cost of the roof and structural components or latent defects that existed before the tenant moved in. Capital improvements are a frequent fight, because a tenant will resist paying to replace an HVAC system that benefits the owner for years after the lease ends.
The most common mistake we see in owner-drafted or broker-drafted NNN leases is a vague CAM clause. If the lease does not define common area maintenance with specifics, name what is excluded, and address how capital costs are amortized, the tenant has room to dispute the annual reconciliation and withhold the difference. A loose CAM definition is the single largest recurring leak in California net leases.
How does California law treat commercial leases differently from residential?
California gives commercial owners far more freedom than residential landlords. The Tenant Protection Act of 2019, AB 1482, and its just-cause and rent-cap rules apply only to residential property. Commercial tenancies have no rent control, no statewide just-cause eviction requirement, and no relocation assistance obligation. The lease, not a statute, sets the rules.
Assignment and subletting are governed by California Civil Code sections 1995.010 through 1995.270. If a lease restricts transfer but is silent on the standard, the landlord must act reasonably, the rule from Kendall v. Ernest Pestana, Inc. (1985). An owner who wants absolute control must say so in the lease. A clause giving the owner sole and absolute discretion over assignment, or a recapture right that lets the owner take the space back instead of approving a transfer, changes the leverage entirely. We routinely add both to owner-side commercial leases.
How do you enforce a triple net lease when a tenant defaults?
When a commercial tenant stops paying or breaches, the owner serves a three-day notice to pay rent or quit under Code of Civil Procedure section 1161 and, if the tenant does not cure, files an unlawful detainer. Commercial unlawful detainers move faster than residential ones because there is no just-cause overlay to satisfy.
On damages, California gives owners a choice. Under Civil Code section 1951.2, the owner terminates the lease and sues for the unpaid rent plus the difference between the remaining rent and what the space can reasonably be re-let for. Under Civil Code section 1951.4, if the lease permits the tenant to assign or sublet, the owner can keep the lease alive and continue to bill rent without retaking the premises. Choosing the right remedy depends on the market and the tenant’s solvency, and it should be decided before the notice goes out. Our team handles these through our work on commercial lease disputes.
What should owners negotiate in a California NNN lease?
Start with the CAM clause. Define common area maintenance precisely, separate controllable from non-controllable costs, cap annual increases on the controllable portion, address how capital expenditures are amortized, and reserve a clear audit and reconciliation procedure. The same care belongs in our work on CAM charge disputes.
Then protect the income stream. Require estoppel certificates and a subordination, non-disturbance, and attornment agreement so a sale or refinance is not held up by the tenant. Pass through property tax increases, including reassessment under Proposition 13 when ownership changes, so a future sale does not leave you absorbing a higher tax bill. Lock down assignment with sole-discretion or recapture language. For owners assembling a portfolio, an NNN property is also a common target in a 1031 exchange, and the lease quality drives the asset’s value. A precise lease is what our California commercial lease attorneys build for owners before a tenant ever signs.
Frequently asked questions about triple net leases in California
What is the downside of a triple net lease for the owner?
The main downside is reduced control paired with reliance on the lease text. If the CAM or assignment clauses are loose, the owner absorbs costs and disputes that a tighter lease would have shifted. A well-drafted NNN lease removes most of that risk.
Who pays for repairs in an NNN lease?
The tenant pays for maintenance and ordinary repairs under a triple net lease. The roof and structural components usually remain the owner’s responsibility unless the lease is an absolute net lease that shifts those too.
What does $35 NNN mean?
It means the base rent is $35 per square foot per year, and the tenant pays the three nets, property taxes, insurance, and CAM, on top of that base. The total occupancy cost is the base plus the net charges.
Why would a tenant agree to a triple net lease?
Tenants accept NNN leases in exchange for lower base rent, longer terms, and more control over the property’s operating decisions. National retail and restaurant tenants often prefer them because they can manage their own maintenance standards.
Does California have rent control on commercial property?
No. California rent control and just-cause rules under AB 1482 apply only to residential property. Commercial rent and renewal terms are governed by the lease, which gives owners significant freedom to set and enforce terms.
Speak with a California commercial lease attorney
A triple net lease is only as strong as its CAM and assignment clauses, and California gives commercial owners room to draft them aggressively. Borna Houman Law drafts, reviews, and enforces net leases for property owners and investors across Los Angeles County. Call (888) 42-BORNA to schedule a confidential consultation.
This article is general information about California law and is not legal advice. Every property and lease is different. For advice about your specific situation, consult a licensed California attorney.
