In United States

real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...

, a bond lease, also called an absolute triple net lease, true triple net lease or even a hell-or-high-water lease is the most extreme form of the NNN lease, in which the tenant is responsible for every fathomable real estate risk related to the property and is responsible for every single property related expense, even in instances of a material casualty/condemnation.

Casualties and acts of God

The term

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...

or bondable is primarily used in higher structured lease forms which also include a requirement that the tenant completely backstop casualty and condemnation loss in addition to assuming all other payment and performance obligations generally associated with a standard triple net lease. At first glance a bond lease may appear identical to a triple net lease, as the tenant is usually responsible for paying all the

property tax A property tax or millage rate is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or net wealth, taxes on the change of ownership of property through inhe ...

es, insurance, and maintenance under both lease structures; however in a bond lease the tenant is obligated to rebuild after a casualty ( acts of God included) or continue paying

rent Rent may refer to: Economics *Renting, an agreement where a payment is made for the temporary use of a good, service or property *Economic rent, any payment in excess of the cost of production *Rent-seeking, attempting to increase one's share of e ...

should the

property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...

be condemned.

Lease termination

Further, the tenant cannot terminate the lease or seek any rent abatements. Should a material casualty or condemnation occur (a 50% threshold is generally utilized) resulting in the tenant's inability to restore the property to operable condition of its original intended use, tenant may only attempt to terminate the lease upon delivering a rejectable purchase offer which is usually calculated to cover any

debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...

as well as provide a return of any equity.

Environmental matters

Further, tenant is responsible for all

environmental A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scale f ...

matters, no matter what the cause. It has been argued that following a major casualty or irreparable condemnation, the tenant isn't required to continue paying rent without abatements, even under a bond lease. The argument follows that under certain circumstances such a material event may even be construed as "constructive eviction" ultimately allowing the bond tenant to walk away from the property without providing a rejectable offer or other termination payment provision. Examples of case law exist however; which uphold the "hell or high water" clause as well as the

constructive eviction Constructive eviction is a term used in the law of real property to describe when a landlord sidesteps the formal, legal eviction process, and instead attempts to force the eviction of the tenant by rendering the property uninhabitable (e.g. cha ...

argument. When analyzing any commercial lease it is always advisable to have the lease reviewed by

legal counsel A lawyer is a person who Practice of law, practices law. The role of a lawyer varies greatly across different Jurisdiction, legal jurisdictions. A lawyer can be classified as an advocate, attorney at law, attorney, barrister, canonist, canon l ...

and pay close attention to the local state real estate laws.

References

Real estate terminology {{business-term-stub