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Last Updated: Apr 20th, 2005 - 18:45:27 |
Rightfully so, high level executives pay attention when substantial commitments are being made and multi million dollar leases usually get everyone’s attention in this Sarbanes/Oxley era. Companies will pay for attorneys, engineers, architects, interior designers, etc., and they invest their internal talent on this important issue.
So what happens after the deal is negotiated to the penny and that once standard lease document has been cut, copied and pasted into a document a tenant can live with?
It heads to a file cabinet and/or is scanned onto a computer server, after the Accounts Payable department has input key information into the accounting system to insure payment, to be dusted off when the lease term nears expiration. The file may be opened if there is a conflict, or a drastic space requirement variance caused by expansion or contractions. But the high powered talent that focused on the deal will more then likely, not invest the time to review the lease and insure that the company gets what you thought your company was paying for. Why? Because doing so requires a great amount of tedious, unappreciated time that takes the executives focus off of their core responsibilities and opportunities.
Even though you think the lease is set in concrete, it is by necessity, fluid and filled with opportunities for the landlord to improve their bottom line whether by honest error or creative application.
To see if you need to make a New Resolution regarding lease costs please answer the following questions:
Are you certain your company paid exactly what it owed for base rent and operating expenses?
Are you confident that your landlord is charging you in accordance with your lease agreement?
Did you know that most leases limit the time a tenant has to review & reconcile billing discrepancies?
Did you know that failure to exercise 'time-sensitive' audit rights may cost your firm thousands and sometimes even millions of dollars in lost profits?
If you can’t answer yes to every question you need to have a professional audit done on all of your leases. I can hear you saying “But wouldn’t accounts payable deal with this?” The answer is yes; they receive the bill, verify the math and prepare the check, but A/P doesn’t contain the real estate expertise to interpret that complex lease document and create a picture of what the rents are supposed to be.
We have seen companies paying utilities bills twice, base operating years calculated improperly, square footage calculation mistakes, improper escalation calculations based on the wrong Consumer Price Index Base Years, padded management fees, capital expenditures being billed as expenses, etc. If that doesn’t get your attention, approximately 50% of leases audited by a professional audit company have errors that are costing tenants more money than they should be paying.
If you have questions about how to get an audit completed call Wisconsin Tenant Representatives. We can put you together with the right auditor so next year, you can focus on your business while knowing that you are getting what you paid for.
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