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March 2025

Arizona Foreclosure Fraud and Equity Stripping Case - Gottlieb Law - Real Estate Attorneys
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Arizona’s Landmark Foreclosure Fraud Lawsuit: What Homeowners, Businesses & Real Estate Professionals Need to Know
Arizona’s Landmark Foreclosure Fraud Lawsuit: What Homeowners, Businesses & Real Estate Professionals Need to Know 938 942 Gottlieb Law

This article is intended to educate—not alarm. If you’re unsure whether a past transaction is valid, now is the time to review it with legal counsel.  Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.


Arizona’s Attorney General just filed a landmark civil suit in State of Arizona v. Cameron Jones et al. The case targets a sophisticated network accused of stealing millions of dollars in home equity from Arizona homeowners facing foreclosure. The alleged fraud began as unsolicited offers of foreclosure relief and grew into an organized scheme of deceptive contracts and rapid property flips. Arizona homeowners and families lost their hard-earned equity in their most valuable asset while shell companies profited off those quick flips of the property.

This lawsuit matters to every corner of Arizona’s real estate market. Homeowners need to recognize warning signs of real estate fraud and protect their rights. Title companies, lenders, and brokers could face serious liability if they overlook suspicious transactions. Investors must sharpen due diligence to avoid unknowingly participating in fraudulent deals. To help make sense of the news and potential ramifications for everyone impacted, let’s dive into why every homeowner and real estate professional in Arizona needs to pay attention to how this case unfolds.

Arizona Foreclosure Rescue Scam Lawsuit: State of Arizona v. Cameron Jones

In March of 2025, Arizona Attorney General Kris Mayes filed a civil complaint in Maricopa County Superior Court (Case No. CV2025‑008402) against more than 40 affiliated individuals and entities for orchestrating an “equity‑stripping” scheme targeting homeowners in pre‑foreclosure. According to the State’s complaint, the defendants identified distressed homeowners by monitoring public Notice of Trustee’s Sale filings and immediately dispatched agents to offer “foreclosure relief” that was actually a high‑pressure pitch to transfer property title for grossly inadequate consideration.

Under the Arizona Consumer Fraud Act (A.R.S. § 44‑1522(A)), it is unlawful to employ “deception, false promise, misrepresentation or concealment” in connection with the sale of real property. The complaint cites numerous cases where defendants falsely labeled contracts as leaseback or charitable “rescue agreements,” pressuring homeowners to surrender their equity for only 20% to 30% of the home’s fair market value.

Beyond consumer fraud, Arizona’s Racketeering Act (A.R.S. §§ 13‑2301–2315) provides civil remedies for a “pattern of racketeering activity,” defined as two or more predicate offenses (including theft by deception) within a five‑year span. The AG’s suit seeks to treat the network of shell limited liability companies, such as A‑Z Homes LLC, Invest in AZ LLC, and dozens of address‑named entities, as a single enterprise designed to conceal illicit gains through rapid property flips and false filings (including fraudulent bankruptcy petitions) to stall foreclosure auctions.

The State seeks injunctive relief dissolving each fraudulent entity, full restitution to defrauded homeowners, disgorgement of ill‑gotten profits (tripled under A.R.S. § 13‑2314.04), and civil penalties totaling $10,000 per violation. By combining Arizona’s consumer fraud and racketeering statutes, the AG’s complaint establishes a powerful legal framework for dismantling the scheme and recovering any stolen equity for Arizona families.

 

Arizona Equity‑Stripping Scam Warning Signs for Homeowners

The allegations in this case reveal a sophisticated scheme that robs homeowners of their hard-earned equity just as foreclosure looms. Recognizing the warning signs is crucial to ensuring you don’t fall prey to such deceptive tactics when dealing with foreclosure or selling your property.

1. Unsolicited “Foreclosure Relief” Visits or Calls

Legitimate foreclosure assistance comes from your lender, a HUD-approved counselor, or a licensed attorney. Scammers can show up unannounced at your door or call claiming to offer immediate help with your mortgage, invoking urgency by saying the foreclosure sale is “imminent” to pressure you into making quick decisions.

2. Contracts Disguised as “Leaseback” or “Rescue Agreements”

Read every document closely. Equity‑stripping schemes typically use contracts that appear to be short‑term rental or loan agreements but secretly transfer title or grant excessive control over your property. If a contract requires you to sign away ownership rights in exchange for vague promises of “future purchase” or “charitable assistance,” treat it as a major red flag.

3. High‑Pressure Signing Without Legal Review

Arizona law (A.R.S. § 44‑1522) prohibits deceptive practices in real estate transactions. Fraudsters exploit homeowners’ fear by demanding signatures on the spot, often late at night or immediately after a foreclosure notice appears online. Never sign any real estate document without taking the time to review it with a trusted attorney.

4. Sale Prices Far Below Market Value

If someone offers to buy your home for substantially less than comparable market values, especially when your mortgage balance is lower, pause immediately. Legitimate investors still need to clear your loan balance and closing costs. An offer that leaves you with little to no proceeds likely conceals hidden fees or fraudulent terms.

5. Promises to Cancel or Delay Foreclosure for a Fee

Beware of anyone who claims they can stop a foreclosure sale for an upfront payment. While filing false bankruptcy petitions or probate cases to stall trustee sales is not specifically mentioned in the Arizona Revised Statutes, they provide a framework for defining and penalizing racketeering activities, including a range of fraudulent or deceptive practices. For example, the statute defines “racketeering activity” as including certain predicate offenses such as theft, fraud, forgery, and other acts of deception committed as part of an enterprise over a period of time.

These types of real estate scams can fall under predicate offenses like fraud or theft by deception if it is shown to be part of a broader, organized effort to defraud creditors or homeowners. In other words, if these filings are used intentionally to delay foreclosure sales and facilitate the transfer of property under false pretenses, they could be prosecuted under the racketeering provisions as part of a pattern of illegal behavior. Keep in mind that courts have interpreted these provisions broadly to cover various forms of fraudulent schemes.  

If you need a deeper legal analysis or guidance on how this applies to a specific situation, consult with an attorney experienced in Arizona real estate laws and fraud.

Your Rights Under Arizona Law

If you recently signed a suspicious agreement, you should immediately seek counsel to determine if you can cancel a foreclosure rescue agreement.  

Immediate Steps if You’ve Been Targeted

  1. Preserve All Paperwork and Communications. Keep copies of contracts, business cards, and any recorded conversations.

  2. Contact an experienced Arizona real estate attorney. Have an experienced real estate attorney review your documents and advise you on rescission, restitution, or litigation options.

  3. File a Complaint with the Arizona Attorney General’s Consumer Fraud Division. Call 602-542‑5763 or submit online at azag.gov/report.

Time is of the essence if you believe you have been a victim of real estate fraud. If you suspect you’ve been targeted by a foreclosure rescue scam or equity‑stripping operation, review your case with an Arizona real estate attorney as soon as possible.

Arizona Foreclosure Fraud Lessons for Title Companies, Lenders & Real‑Estate Professionals

This suit shines a spotlight on critical compliance failures across the real‑estate industry. Title companies, mortgage lenders, brokers, and investors will likely need to sharpen due‑diligence practices now to potentially avoid the same racketeering liability and treble‑damages exposure faced by defendants in this high‑profile equity‑stripping case. Here are some important things for individuals and companies in the real estate industry to consider:

These simple, common-sense suggestions are not an exhaustive list of best practices, nor do they replace the need to review any specific case, transaction, or business practices with legal representation.

1. Flag Distressed‑Property Transactions Immediately

Monitor county recorder filings for Notices of Trustee’s Sale. Any off-market sale of a home in active foreclosure, especially to an LLC buyer at a price dramatically below Zillow estimates, should trigger a “red flag” review under Arizona’s Consumer Fraud Act. Maintain a log of flagged transactions and require enhanced scrutiny before moving forward on any flagged transactions.

2. Mandate Independent Seller Counsel

Arizona’s racketeering complaint alleges defendants used deceptive contracts to strip title. Protect all parties by insisting that sellers facing foreclosure secure independent legal representation before signing any sale or leaseback agreement. Document proof of counsel in transaction files to demonstrate good‑faith compliance.

3. Establish Formal Verification Protocols

Implement a written checklist that confirms:

  • Buyer and seller identities via government‑issued ID verification
  • Chain‑of‑title integrity (review all prior transfers for suspicious rapid flips)
  • Fair market valuation analysis against county assessor data
  • Verification that no foreclosure‑rescue or leaseback contract is disguised as a sale

Consider using advanced software solutions to automate alerts for transactions that meet distress criteria (e.g., purchase price < 70% of market value) to protect your business and provide the most value to clients/customers.

4. Train Staff on Foreclosure Rescue Scam Indicators

Provide quarterly training on common equity‑stripping tactics, including unsolicited “help” visits, misleading contract language, and rushed closings. Require staff to escalate any suspicious deal to your compliance or legal department for immediate review.

5. Document Every Step — And Every Decision

Arizona’s Racketeering Act allows civil suits against professionals who “knowingly facilitate” fraud. Maintain a detailed audit trail for every distressed‑property transaction, including emails, due‑diligence checklists, valuation reports, and signed attestations from seller counsel to document your internal procedures and protocols in case any legal issues arise.

Consequences and Next Steps for Industry Professionals

Title agencies, lenders, and real estate professionals must understand that non‑compliance carries severe risks. Firms implicated in the equity‑stripping lawsuit may face civil penalties of $10,000 per violation under Arizona’s Consumer Fraud Act and treble damages on all illicit profits. Such financial penalties can accumulate quickly, while reputational damage can endanger licenses and erode client trust.

The evolving legal landscape demands proactive measures. If your business deals with foreclosure properties, you need to act swiftly and decisively. Consider these additional steps to ensure compliance and protect your business:

  • Conduct Comprehensive Compliance Audits: Engage experts to meticulously review your due diligence protocols for all foreclosure transactions. Ensure that your processes align with Arizona’s anti‑fraud statutes and that every step, from verifying seller identity to confirming market value, is thoroughly documented.

  • Implement Rigorous Risk‑Management Counseling: Develop training programs that empower staff to spot red flags, such as transactions with unusually low purchase prices or rushed closings lacking independent legal review. Elevate internal standards by requiring formal verification and documentation for every deal.

  • Establish Enhanced Verification Procedures: Adopt written protocols that demand independent seller representation before any transaction. Utilize automated systems to monitor distressed‑property filings and flag suspicious activity, ensuring that every case is reviewed by a compliance officer before proceeding.

Arizona Equity‑Stripping Case Lessons for Attorneys & Regulators

Every attorney, regulator, or policymaker reviewing the Arizona equity‑stripping lawsuit should see it as more than a single enforcement action, it is a blueprint for preventing and prosecuting sophisticated real‑estate fraud. The State’s use of both consumer‑fraud and racketeering statutes creates a roadmap of actionable lessons that can safeguard homeowners and strengthen legal compliance across the industry.

Lesson 1: Early Detection Saves Equity

The alleged acts behind State of Arizona v. Cameron Jones et al. started with the involved individuals/companies monitoring publicly filed notices of foreclosure sales and sent workers to these homes within hours of posting, obviously hoping to catch homeowners before they had time to investigate their options. This hyper‑speed approach shows that conventional reactive processes are not working well enough. To help with early detection, legal teams and government agencies should consider:

  • Implementing automated alerts tied to county recorder data to flag filings immediately

  • Creating centralized dashboards that aggregate foreclosure notices by address or owner

These proactive measures can intercept fraudulent outreach before a deed is signed away and preserve homeowner equity.

Lesson 2: Professional Facilitation Carries Severe Liability

Arizona’s Racketeering Act holds title agents, attorneys, and escrow companies accountable when they knowingly facilitate fraudulent transactions. The complaint specifically names law firms and title companies for notarizing and closing deals that blatantly violated statutory protections for distressed sellers. To limit exposure, legal and title professionals should consider the following actions:

  • Institute a mandatory conflict‑check process for all transactions involving LLC buyers purchasing foreclosed property

  • Require documented proof of independent seller counsel before any deed transfer

  • Maintain a transaction file that includes a market‑value appraisal, identity verification, and a compliance attestation signed by a senior partner

Lesson 3: Enforcement Will Intensify—Nationwide Ripples Ahead

Arizona’s civil racketeering suit sets a precedent likely to inspire similar actions in other states. The AG’s strategy demonstrates that consumer‑fraud enforcement can target entire enterprises rather than isolated actors, increasing both financial risk and reputational damage for anyone involved in foreclosure‑related transactions. Attorneys and policymakers could consider the following improvements to existing legislation:

  • Monitor emerging case law around equity‑stripping and foreclosure rescue scams, including developments in State of Arizona v. Cameron Jones et al.

  • Update firm compliance manuals to include specific protocols for identifying and reporting foreclosure‑rescue red flags

  • Advocate for statewide registries of foreclosure consultants and mandatory disclosures for distressed‑property transactions

As regulatory scrutiny escalates, staying ahead of enforcement trends isn’t optional, it’s essential to protect clients, preserve market integrity, and avoid costly litigation. Every lesson from Arizona’s landmark equity‑stripping case underscores the need for rigorous controls, rapid response capabilities, and unwavering commitment to ethical practice. Legal professionals who embed these insights into their standard operating procedures will not only shield their firms from liability but also play a pivotal role in preventing predatory schemes that devastate homeowners across the nation.

Why This Arizona Equity‑Stripping Lawsuit Matters to Your Business

Arizona’s unprecedented civil suit against Cameron Jones et al. is a seismic event for any organization involved in real‑estate transactions, lending, or investment. The lawsuit exposes how quickly a well‑organized fraud can infiltrate the market, undermine consumer trust, and inflict crippling financial and reputational damage on businesses that fail to detect or report suspicious activity, even if they did not knowingly participate in the fraud.

Lenders and Title Companies at Risk

Even businesses with established compliance programs can fall victim when fraudsters exploit loopholes in distressed‑property workflows. This case highlights critical vulnerabilities in many service providers, professionals and companies in the real estate industry. Beyond the extensive legal and financial penalties, forced dissolution of shell entities and receivership proceedings can freeze assets, derail transactions, and clog internal resources. Being named in a high‑profile foreclosure fraud suit will likely undermine client confidence and can trigger licensing investigations.

Arizona Foreclosure Fraud & Equity‑Stripping Legal Issues

This case underscores the urgent need for homeowners, title professionals, lenders, and investors to understand their rights and risks. From deceptive door‑to‑door offers to racketeering claims that can seek treble damages, this case illustrates how quickly predatory practices can strip away equity, damage reputations, and expose businesses to crippling liability. Whether you’ve already been targeted by a foreclosure fraud scam or you simply want to ensure your real‑estate transactions are bulletproof, Gottlieb Law stands ready with the experience and proven strategies you need.

If you need representation relating to an equity stipping situation, feel free to reach out to our qualified team at Gottlieb Law.  Don’t wait until a fraudulent deed or enforcement action jeopardizes your equity, license, or bottom line. Schedule your consultation with Gottlieb Law today to assess your exposure, protect your assets, and build a compliance plan tailored to Arizona’s evolving enforcement landscape.

Call Gottlieb Law at 602-899-8188 or use our contact us page to schedule an initial consultation with our firm.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

 

Resolving Boundary Disputes in Arizona - Gottlieb Law
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Resolving Boundary Disputes Between Properties in Arizona
Resolving Boundary Disputes Between Properties in Arizona 1792 1024 Gottlieb Law

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Arizona’s real estate market is as competitive as it is complex. Ongoing urban development, property redesigns, and evolving legal precedents have contributed to a rise in boundary disputes between commercial properties. Issues such as unclear property lines, unmapped borders, misplaced fences, under-marked boundaries, and conflicting surveyor reports can lead to significant operational disruptions—and, in many cases, costly legal disputes.

In the eyes of the law, prevention is the most effective strategy. Proactively implementing legal safeguards and addressing potential conflicts early can help prevent minor disagreements from escalating into full-blown litigation.

Here’s what Arizona property owners should understand about boundary disputes, their legal consequences, and the most effective ways to resolve them.

Disagreements About Boundaries

Ambiguous or Unclear Dividing Lines for Land

The division between two neighboring properties or businesses is not always clear-cut. Boundary disputes arise from:

  • Conflicting surveys/maps – Historical surveys/maps can often differ or be outdated, which can create confusion.
  • Misleading deed boundaries – Ambiguous or incorrect statements in property deeds or recorded documents can cause problems regarding who owns what.
  • Mistaken boundaries – parties may have been operating under a different belief as to the true boundaries of the properties at issue.

Property owners may find themselves in lengthy legal fights over land they thought they owned when these discrepancies occur.

Unpermitted Use and Gain of Ownership by Possession

An encroachment occurs when a neighboring landowner uses or builds on another party’s land, such as erecting fences, extending driveways, planting landscaping, or constructing structures beyond the recorded property line. If left unaddressed, encroachments can lead to legal disputes or ownership claims over time.

Arizona law also recognizes adverse possession, which allows a person to claim ownership of land if they have openly, continuously, and exclusively used it without the owner’s permission for over 10 years. 

Additionally, under Arizona law, as recognized in Beck v. Neville, property ownership may be established through boundary by acquiescence. This doctrine does not require hostility but instead applies when both property owners have silently accepted a specific boundary as the property line over an extended period—even if it differs from the legally recorded boundary.

Title and Deed Problems

Mistakes on property lines within official records may result in conflicting claims to the same boundary line. Some common issues include:

  • Overlapping legal descriptions in adjacent deeds
  • Title defects that obscure legitimate ownership
  • Discrepancies between recorded boundaries and actual land use

Landowners are often unaware of these issues until after a neighboring property owner makes a claim.  At that point, the dispute may require an extensive title search or professional survey to accurately determine the true boundary lines.

Regulatory and Zoning Considerations

Legal descriptions and surveys are not the only sources that can trigger boundary disputes—local zoning laws, easements, and redevelopment plans may also play a role. Arizona municipalities enforce zoning regulations that include specific requirements such as:

  • Minimum setback requirements, which dictate how far structures must be from property lines
  • Easements, which may limit how land can be used or developed
  • Redevelopment plans, which may impact historically understood property boundaries

Longstanding boundary conflicts may surface due to zoning changes, easement enforcement, or redevelopment efforts—potentially affecting property value and commercial operations.

Financial and Operational Impacts

The financial implications of boundary disputes can be significant—and the longer they remain unresolved, the more costly they tend to become. Common examples include:

  • Property devaluation – Losing a portion of land can reduce a property’s overall market value and limit future development.
  • Business disruption – If commercial property, access is restricted or existing structures require modification, business operations may be delayed or impaired.

Addressing boundary disputes early can help avoid escalating costs and minimize the impact on property value and operations.

Arizona Laws on Boundary Disputes

Boundary by Acquiescence and Adverse Possession

Arizona recognizes the legal doctrine of boundary by acquiescence, which allows a long-accepted boundary between two neighboring properties to become the legal property line—even if a later survey shows otherwise. This typically applies when both property owners have treated a specific boundary as the true line for an extended period, generally ten years or more, without objection.

Similarly, adverse possession allows an individual to acquire ownership of land if they have openly, continuously, and exclusively occupied it without the legal owner’s permission for a period of at least ten years under Arizona law. 

The Importance of Surveys and Title Records

Arizona law relies on recorded legal descriptions and surveys to define property boundaries. In boundary disputes, professional land surveys are often the most reliable and persuasive evidence, as they provide legally recognized and objective measurements of property lines.

Implications of Zoning and Land Use

Even if a boundary is altered through legal action—such as a quiet title judgment or a boundary by acquiescence ruling—zoning restrictions and land use regulations still apply. This means that certain structures or uses may remain prohibited on the newly defined property. It is essential to review local zoning codes before initiating or finalizing any legal action involving boundary lines.

Legal Issues and Title Insurance

Title insurance can protect property owners from financial risks tied to boundary disputes. Many policies cover legal expenses and potential losses if a boundary-related claim arises. This makes title insurance a valuable safeguard in both residential and commercial real estate transactions, especially where boundary clarity is critical.  

It’s important to consult with the title company to understand exactly what the policy covers, as not all boundary issues may be included under standard terms.


Shifts With Consequences for Boundary Disputes

Technology’s Role in Resolving Disputes

The rise of GPS-based boundary surveys and drone imaging has significantly improved boundary accuracy. These tools provide clear, objective evidence, helping to resolve disputes more efficiently and with greater precision.

Increased Use of Alternative Dispute Resolution (ADR)

Many property owners are turning to mediation or arbitration to settle boundary disputes. ADR allows for resolution through neutral third parties, often resulting in faster, more cost-effective, and legally binding outcomes—without going through the traditional court process.

Geographic and Development Trends in Arizona

Arizona’s rapid urban expansion and rise in mixed-use developments have added complexity to boundary issues. With more properties sharing walls, parking lots, and access roads, the potential for disputes has increased. In this environment, clear boundary definitions and proactive legal planning are more essential than ever.

 

Resolving Methods for Boundary Disputes

Proactive Steps to Prevent Disputes

Property owners can reduce the risk of boundary conflicts by taking the following steps:

  • Conducting a professional land survey before purchasing or developing property
  • Reviewing title records and local zoning regulations prior to finalizing any agreements
  • Establishing written boundary agreements with neighboring property owners when appropriate

Effective Dispute Resolution Options

  • Negotiation – Often the most efficient and cost-effective approach. In many cases, a direct and respectful conversation between neighbors can resolve the issue without legal escalation.
  • Mediation or Arbitration – A neutral third party can help facilitate a resolution. Mediation encourages compromise, while arbitration can result in a legally binding decision outside of court.
  • Litigation – In complex or high-value disputes, court intervention may be necessary. Success often depends on the strength and clarity of the evidence, including surveys, deeds, and historical property use.

Financial and Legal Precautions

Protecting your property from boundary disputes requires strategic financial planning and proactive legal safeguards. One of the most effective protections is investing in title insurance, which may be able to shield you from claims challenging your property’s boundaries. This coverage acts as a crucial safety net, helping to prevent unexpected legal expenses from draining your resources.

In addition, setting aside dedicated funds for legal fees, filing costs, and professional surveys is a smart way to ensure you can respond quickly and confidently if a dispute arises. A well-prepared budget enables you to engage expert assistance without delay, rather than postponing resolution due to financial constraints.

Most importantly, working with an experienced real estate attorney is essential for assessing potential risks and crafting a strategy for dispute prevention and resolution. A knowledgeable lawyer can (a) conduct detailed property evaluations, (b) review deed and title records, and (c) guide negotiations to prevent minor issues from escalating

Whether your matter involves mediation, arbitration, or litigation, having the right legal counsel ensures your commercial property interests are protected—and that boundary disputes are handled efficiently and effectively.

Preserve Your Interest in Property

Real estate boundary disputes in Arizona can be complex and time-consuming. Understanding legal parameters, taking proactive steps, and using mediation or legal agreements can help avoid major financial losses.

For property owners facing boundary issues, seeking expert legal assistance is crucial. Skilled real estate lawyers can guide negotiations, mediation, or litigation, ensuring that property rights remain protected.

Call Gottlieb Law at 602-899-8188 or use our Contact Us page to schedule an initial consultation with our firm.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

 

What Arizona Landlords and Tenants need to Know About Triple-Net NNN Leases - Gottlieb Law
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What Arizona Commercial Landlords and Tenants Need to Know About Triple-Net (NNN) Leases
What Arizona Commercial Landlords and Tenants Need to Know About Triple-Net (NNN) Leases 1841 1229 Gottlieb Law

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

 

Signing a commercial lease in Arizona comes with important decisions, and one of the biggest is whether to agree to a Triple-Net (NNN) lease. While NNN leases can offer lower base rent, they also require tenants to cover expenses that might otherwise fall on the landlord. If you’re considering leasing a retail, office, or industrial space, here’s what you need to know before committing.

What Is a Triple-Net (NNN) Lease?

A Triple-Net (NNN) lease is a commercial rental agreement where tenants pay more than just their base rent—they also cover certain property-related expenses. This arrangement transfers financial obligations from the landlord to the tenant, making it an attractive option for property owners who want to reduce their costs and limit financial risk. While this lease type is most common in retail spaces, it’s also used for office buildings, industrial properties, and even standalone corporate locations, although office leases are more commonly structured as gross or modified gross leases.

In an NNN lease, tenants pay for:

  • Property Taxes – Each tenant covers their proportionate share of property taxes, typically based on the amount of space they occupy within a multi-tenant building or assumes full responsibility in a single-tenant property. Tax rates can fluctuate, and any increases are typically passed onto the tenant, so it’s important to consider potential increases over time.
  • Insurance – The tenant contributes to the cost of insuring the property, ensuring coverage for risks like fire, natural disasters, and liability claims. The exact expenses tenants are responsible for will depend on the terms outlined in the lease agreement and the type of property being rented.  Tenants may also carry their own liability and business insurance separate from the landlord’s property insurance policy.
  • Maintenance & Repairs – Unlike other lease structures where landlords handle property upkeep, NNN tenants often take responsibility for repairs, general maintenance, and, in some cases, structural elements like roofing and HVAC systems. That said, structural components are typically still the landlord’s responsibility unless specifically negotiated otherwise.  The overall expense can be substantial, especially if the building requires frequent repairs or major upkeep.

Because tenants take on these additional costs, landlords typically set a lower base rent than they would with other lease structures. While this can be appealing to tenants looking for reduced upfront costs, the long-term financial obligations of taxes, insurance, and maintenance should be carefully considered before signing an NNN lease. Understanding the scope of these responsibilities and factoring them into the overall business budget is essential for tenants looking to avoid unexpected financial strain.

 

What Sets an NNN Lease Apart from Other Lease Agreements?

The way costs are divided between landlords and tenants can differ significantly across various commercial lease agreements. The main difference with an NNN lease is that tenants take on additional financial responsibilities beyond rent, and while other lease structures may include some shared expenses, an NNN lease places a greater financial burden on the tenant. Understanding these distinctions is crucial for businesses deciding which lease type best aligns with their budget and long-term goals.

Here’s how an NNN lease compares to other common lease agreements:

  • Gross Lease – A simple lease structure in which the tenant pays a set monthly rent while the landlord handles all major property expenses, such as taxes, insurance, and maintenance. It provides predictability for tenants, as they won’t face fluctuating operating costs or increases. However, because the landlord assumes more financial responsibility, the base rent is typically higher than in an NNN lease.
  • Modified Gross Lease – A hybrid lease structure that combines elements of both a gross lease and a Triple-Net (NNN) lease. The tenant and landlord negotiate how expenses are divided, often with the tenant paying for utilities, janitorial services, and minor maintenance while the landlord continues to cover larger expenses like property taxes, insurance, and major repairs. This structure offers flexibility, as tenants can take on some costs while avoiding full responsibility for the entire property.
  • NNN Lease – This lease structure requires the tenant to take on property taxes, insurance, and maintenance costs, rather than the landlord covering these expenses. Because the tenant bears these additional expenses, the base rent is often lower than in Gross or Modified Gross Leases.  That said, tenants must budget for potentially fluctuating expenses, which can add up over time. This lease type is common in standalone retail locations, shopping centers, and multi-tenant office spaces.

Choosing between these lease types depends on the tenant’s financial strategy, risk tolerance, and desire for control over the property. While a gross lease provides cost certainty, an NNN lease offers potentially lower upfront rent but requires careful financial planning due to variable expenses.

 

Why Do Landlords Offer NNN Leases?

NNN leases are a strategic choice for landlords because they reduce financial risks and operational responsibilities. By transferring property-related expenses to tenants, landlords can maintain steady income without the unpredictability of fluctuating costs.

Here’s why many landlords prefer NNN leases:

  • Predictable Revenue – Since tenants cover property taxes, insurance, and maintenance, landlords receive a consistent income stream without unexpected deductions for property expenses.
  • Lower Management Burden – With tenants handling maintenance and repairs, landlords don’t have to oversee day-to-day property upkeep, making it a more hands-off investment strategy.
  • Attractiveness to Investors – Commercial properties with NNN leases are appealing to investors because they provide stable, long-term income with minimal landlord involvement. This structure is especially appealing to real estate investment trusts (REITs) and private investors looking for a steady income with minimal management responsibilities.
  • Risk Reduction – Property tax increases, insurance premium hikes, and routine maintenance costs are the tenant’s responsibility, shielding landlords from rising expenses that could otherwise eat into their profits. However, in some leases, landlords may still be responsible for major structural repairs (e.g., roof or foundation) unless otherwise negotiated.

Because of these benefits, NNN leases are widely used in retail properties, fast-food chains, corporate office spaces, and industrial buildings. While tenants must carefully assess the financial implications, landlords view this structure as an effective way to maximize investment returns with fewer responsibilities.

The Benefits of an NNN Lease for Tenants

While NNN leases are often seen as landlord-friendly, they also offer key advantages for tenants—especially businesses looking for a long-term location with lower base rent. Here’s why an NNN lease might be worth considering:

  • Reduced Base Rent – Because tenants cover costs such as property taxes, insurance, and maintenance, landlords typically offer lower base rent than in a gross lease. This structure can make it easier for businesses to secure prime commercial space in high-demand areas, though tenants should carefully evaluate the total cost of occupancy rather than just the base rent.
  • Steady Location – NNN leases are often structured as long-term agreements (typically 5 to 20 years), allowing businesses to establish themselves in a consistent location without frequent lease renegotiations. This stability is particularly beneficial for franchises, retail businesses, and corporate offices that depend on long-term location security. However, tenants should review escalation clauses and renewal terms to fully understand their financial commitments.
  • Greater Control Over the Property – With maintenance responsibilities shifting to the tenant, businesses have more say in how the property is managed. Instead of relying on a landlord’s maintenance schedule, tenants can address repairs promptly and ensure the space aligns with their operational needs and brand standards. This is especially valuable for businesses that rely on customized environments, such as restaurants, medical offices, and retail stores.
  • Predictable Operating Environment – Unlike some lease structures where landlords can increase rent unpredictably to offset rising costs, NNN leases provide tenants with direct oversight of operating expenses. However, because costs like property taxes, insurance, and maintenance can fluctuate, tenants must carefully analyze historical cost trends and budget for potential increases over time.

For the right tenant, an NNN lease offers a mix of affordability, stability, and control—key factors in building a long-term business strategy.

The Risks and Responsibilities of an NNN Lease

Despite its advantages, an NNN lease comes with added financial obligations that tenants must evaluate carefully. These responsibilities can lead to unexpected expenses, making it crucial to assess potential risks before signing.

  • Unexpected Costs – Property taxes and insurance premiums are subject to change, and tenants must be prepared for possible increases. A sudden tax reassessment or a rise in insurance rates could significantly impact a business’s budget. Unlike fixed-rent agreements, NNN leaseholders bear the burden of these fluctuations.
  • Maintenance Responsibilities – In an NNN lease, maintenance obligations extend beyond routine repairs—tenants are often responsible for HVAC servicing, plumbing, and parking lot upkeep. However, responsibility for major structural elements like the roof and foundation varies by lease agreement. If a property requires frequent repairs or significant upkeep, these costs can accumulate rapidly. Without proper budgeting, a tenant could face substantial, unplanned expenses.
  • Long-Term Commitment – Many NNN leases span 10+ years, limiting a business’s ability to relocate, downsize, or expand. Breaking an NNN lease can be costly, often requiring a lease buyout or subleasing (if permitted by the landlord). Businesses should carefully align lease terms with their long-term growth strategy before committing.
  • Complex Lease Agreements – NNN leases tend to be more complex than standard lease structures, often containing detailed clauses outlining tenant responsibilities and expense breakdowns. Without careful review and negotiation, tenants could agree to unfavorable terms that significantly increase their financial burden. Key areas to assess include expense caps, maintenance obligations, and escalation clauses. Seeking legal and financial guidance before signing can help avoid costly surprises.

For businesses considering an NNN lease, understanding both the financial and operational commitments is essential. What may seem like a cost-effective option upfront can become a major burden if expenses aren’t managed properly.

 

What Arizona Tenants Should Consider Before Signing an NNN Lease

Arizona’s commercial real estate market, particularly in Phoenix, Scottsdale, and Tucson, offers many NNN lease opportunities. Before committing to a lease, tenants should carefully review all terms and financial obligations to prevent unexpected expenses.

  • Breakdown of Costs – It’s not enough to focus on the base rent—tenants need a complete financial picture. Request an estimate of property taxes, insurance premiums, and expected maintenance costs. If possible, review historical tax and insurance data for the property to anticipate future increases.
  • Maintenance Responsibilities – Clearly define which maintenance tasks fall under the tenant’s obligations. Is the tenant liable for significant structural repairs, or do those fall under the landlord’s responsibilities? Are maintenance costs shared among multiple tenants, or is each business solely responsible for its space? Clarifying these points in advance can help avoid surprise expenses down the road.
  • Future Tax & Insurance Increases – Commercial properties in Arizona are subject to tax reassessments, usually triggered by a property sale or major improvement.  Additionally, insurance rates can fluctuate due to market conditions. Tenants should factor in potential increases over the course of the lease and negotiate terms that prevent excessive cost spikes. Some leases may allow for cost caps or limit increases to a certain percentage per year—these protections can be crucial.
  • Lease Negotiations – A commercial lease attorney can help tenants identify unfavorable terms and negotiate better conditions. Whether it’s securing a cap on tax increases, reducing liability for structural repairs, or clarifying unclear clauses, professional legal review ensures tenants don’t get locked into an agreement that could become financially unmanageable.

An NNN lease can be a great opportunity for businesses, but only when the terms align with their long-term financial strategy. Taking the time to analyze costs, assess risks, and negotiate favorable terms will set tenants up for success in Arizona’s competitive commercial real estate market.

 

Need Legal Guidance for Your NNN Lease? Gottlieb Law Can Help

Signing an NNN lease in Arizona is a major financial commitment. Before committing to a lease, it’s crucial to evaluate potential risks and work out terms that protect your financial and legal interests. Gottlieb Law has substantial experience in commercial lease agreements, helping tenants secure fair contracts that align with their business goals.

Contact Gottlieb Law today at 602-899-8188 to schedule your initial consultation or use our Contact Us page. Our experienced commercial real estate attorneys routinely assist commercial landlords and tenants with commercial lease agreements in Arizona.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.
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