Tennessee Commercial Maintenance: NNN Leases and HVAC Liability

In residential Tennessee real estate (especially URLTA counties like Davidson or Shelby), the landlord securely bears the heavy burden of the "implied warranty of habitability." In commercial real estate, this warranty simply does not exist.

If the roof leaks onto a commercial tenant's inventory, or the HVAC fails in July, the responsibility to fix it—and pay for the damage—is determined entirely by the maintenance clauses written into the commercial lease.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult a qualified Tennessee commercial attorney. Information last verified: March 2026.

The NNN Lease: Tenant Bears the Load

In a standard Triple Net (NNN) lease (the most common structure for retail spaces, restaurants, and single-tenant industrial buildings in Tennessee), the commercial tenant contractually assumes nearly all maintenance responsibilities.

The Tenant's Responsibilities

In an NNN scenario, the tenant must reliably repair, maintain, and replace:

• Interior walls, paint, and flooring.
• Plumbing and electrical systems within the suite.
• The HVAC System: This is a notoriously critical negotiating point. Often, tenants are assigned full responsibility for the HVAC unit servicing their suite, including costly total replacements. (Savvy tenants negotiate absolute caps on their annual HVAC liability, or require the landlord to replace units past their usable lifespan).
• Janitorial services and interior pest control.

The Landlord's Responsibilities (Structural/Exterior)

Even in an NNN lease, the landlord typically retains responsibility for:

• The "structural elements" of the building (foundation, load-bearing walls).
• The roof (both the membrane and structural supports).
• Exterior walls.
• Common Areas (parking lots, landscaping, shared lobbies).

Common Area Maintenance (CAM) Charges

While the landlord performs the maintenance on the common areas and building exterior, the cost of that maintenance is passed directly to the tenants in a NNN lease via CAM charges.

• Each commercial tenant pays a "pro-rata share" based on the square footage they occupy compared to the total leasable area of the building.
• If a strip mall has four identical stores, each tenant pays 25% of the snow removal, parking lot sweeping, landscaping, and exterior lighting costs.

CAM Audits: Commercial tenants should enthusiastically negotiate the right to audit the landlord's CAM expenditures annually to ensure they are not being overcharged or illegally billed for capital improvements (like a completely new roof) that should be amortized or paid solely by the landlord.

The Gross Lease: Landlord Bears the Load

In a full-service Gross lease (common in multi-tenant high-rise office buildings in major Tennessee cities), the paradigm flips entirely. The landlord takes on almost all maintenance responsibilities, including the interior of the tenant's suite.

• The tenant's rent is significantly higher to cover these built-in service costs.
• The tenant is generally only responsible for avoiding negligent damage and perhaps maintaining specialized equipment related to their specific business.

End-of-Lease "Make Good" Clauses

Commercial tenants must review the lease's "surrender" or "restoration" clause. When the lease ends, the tenant is usually required to return the premises in "broom clean" condition, minus normal wear and tear.

• However, the landlord often reserves the right to demand the tenant rip out all tenant improvements (partition walls, custom lighting, specialized plumbing) and manually restore the unit back to a "vanilla shell" at the tenant's expense.

How Landager Helps

Managing CAM reconciliations across a Tennessee commercial portfolio is an accounting nightmare. Landager automates the process by taking your verified maintenance and utility invoices throughout the year and mathematically distributing the costs according to each tenant's specific pro-rata share, generating clear, auditable year-end CAM reconciliation statements.

Back to Tennessee Commercial Lease Laws Overview.