The what, when and how of CRE lease audit

The what, when and how of CRE lease audit

Calculating the financial aspects of leases is a complex task, especially when the building’s operational costs are passed on to the tenant. The scope of overcharging the tenant by the landlord is high leading to monetary losses that might go undetected for several years. A lease audit is a vital tool for identifying overcharges and to prevent them in future. Lease audit analyzes and reports discrepancies in the charges that can help save a tenant thousands of dollars.

Who needs lease audit?
Any CRE tenant who pays additional rent and other operating charges should initiate an audit of their lease. This is doubly true if a tenant who feels that contractual obligations are not being met.  A lease audit usually covers CAM reconciliations, base year calculations, pro rata share, escalations, RE taxes, insurance, utilities and more. A lease audit will review and verify every charge that a tenant is billed.

What are the benefits of lease audit?
Lease audits can help identify any financial discrepancies or noncompliance issues. Through lease audit, tenants can not only avoid future overcharges but can also recover lost money. Requiring a regular lease audit will ensure the integrity of the charges passed on to the tenant.

Who pays for the lease audit? Usually it’s the tenant who bears the cost of lease audit, except in situations where the tenant is found to be over paying the landlord. In these cases the tenant can ask the landlord to reimburse the lease audit charges along with the other overpaid charges.

Who should audit? Reviewing all the billings and calculating the charges and possible refunds can be technically very complex and time consuming. Hence, lease audit should be undertaken by an organization who has the right experience and skills to plan and undertake lease audit responsibly.

For more information on lease audit, lease abstraction and administration services, you can contact or visit our website or call 412-567-0010.