Landlords don’t like lease audits and push very hard during lease negotiations to restrict tenants’ ability to audit their leases. Many tenants succumb to this pressure, without realizing that that these restrictions often undermine all of the protections that were negotiated into the operating expense escalation provisions. This article examines some of the arguments landlords commonly make with respect to restrictions on audit rights.
Checklist for Negotiating a Fair Lease Audit Provision
Landlords and tenants often argue over lease audit rights in leases. Landlords seek to restrict the tenants’ right to audit by imposing restrictions on an otherwise open right. Tenants seek to ensure that they have a practical, workable clause that will enable them to verify their costs. Michael E. Meyer, Esq., one of the country’s leading leasing attorneys and partner at DLA Piper LLP (US), has developed this checklist of issues that should be covered in a well-negotiated lease audit clause.
Cost-Conscious Tenants Turn to Lease Audits to Keep Occupancy Costs in Line
In their continuous search for new ways to reduce costs, companies have shifted their focus to non-core expenses that are still significant to the bottom line. One of these areas is real estate leasing costs, which many corporate executives have traditionally viewed as non-controllable. However, an increasing number of companies now realize that there is […]
6 Reasons to Check Your Lease’s Operating Expense Bill
Landlords are devoting more time and professional resources to increase revenue. As evidence of this, landlord-oriented articles are appearing in various publications suggesting how to uncover hidden income from tenants through greater attention to tenant pass-throughs. Now more than ever, tenants should be reviewing their leases and bills to make sure they do not contain overcharges or errors. Here are 6 reasons why tenants should increase their vigilance with respect to operating expenses and other pass-through charges.
Failing to Audit Last Year’s Expenses Can Cost You Years of Rent Overcharges
Your Landlord’s CPA Certification is Not Enough
Most landlords employ a CPA firm to prepare the entity’s financial statements and tax returns. In many cases, a segment of the financial statements that are issued are delivered to tenants in support of their operating expense pass-through billings. Tenants must be careful to not rely on these statements to protect their rights.