Real estate is the largest cost that most business owners carry with the exception of personnel expenses. Controlling costs to maintain profitability is critical as rent prices and space needs fluctuate but it can be difficult to predict expenses amidst the ebbs and flows of the business cycles. Understanding the terms of your lease and your contracted financial obligations can help to avoid costly oversights and in many cases overpayment. If you are unsure if you are overpaying, perhaps the time is right for a lease audit.
What is a Lease Audit?
Conducted by a highly-experienced team, lease audits compare the language of a lease to the billing by a landlord to ensure that the terms of the lease are being honored and that a tenant is not overpaying. Lease auditors will look at such common problem areas as overpaying for standard maintenance services or billing for capital improvements and determine if there are overpayments being applied, intentionally or not. Experience with billing and finance will allow lease auditors to also review billing methodology to ensure that payments are being calculated correctly. If errors are found, a qualified lease auditing firm will work with the tenant and landlord to determine a compensation plan that works for both parties. An experienced lease auditor recognizes the need for a productive, continued tenant/landlord relationship and will navigate the negotiations to ensure that an adversarial situation is avoided.
Why Should I Audit My Lease?
If you own a business and lease property, it is a good idea to audit your lease. Although you may carefully review your monthly lease payments, lease auditors possess the expertise and experience needed to conduct a comprehensive deep dive into your lease payments. Lease auditors are familiar with the most common overpayments and billing errors, enabling them to zero in on these and ensure you are being charged the correct amount.
Over the course of a lease, minor monthly billing errors can add up to thousands or millions of dollars in lost profits that could have been reinvested in your business. Lease auditors have been able to recover over $100 million in overpayments over the last decade on behalf of lessees.
When Should I Audit My Lease?
Although a lease audit can be conducted at any time, if you are contemplating a renewal or lease termination, renovations or there was a recent change in building ownership or property management, it would be an excellent time to conduct a lease audit. As most lease auditors also only receive payment for their services if they find an issue requiring correction, it is a win-win proposition and one that business owners should not pass up.
NAI James E. Hanson’s preparation as a tenant advisor/representative is based on our many years of experience, coupled with an unparalleled knowledge of the marketplace. We pride ourselves in our team approach which enables us to provide clients with a highly sophisticated analysis of the financial, physical and legal aspects of any contemplated transaction. In our never-ending commitment to providing the gold standard in tenant service, NAI James E. Hanson has a long history of advising tenants as they navigate the lease auditing process. Contact me today at wwolf@naihanson.com or 201-925-9590 to set up a consultation.
