What is a Lease Audit?

A lease audit is a tool that commercial tenants can use to determine if they have been overcharged by their landlords, and to recover any overcharges that are identified. As a result of these audits, errors are frequently uncovered. Often, these errors are found in expenses that have been incorrectly passed through to tenants as Common Area Maintenance (CAM) costs.

Although commercial leases typically obligate tenants to share certain CAM costs, landlords often include expenses that are not legitimate pass-through items such as capital expenditures. Also, tenants often negotiate the exclusion of certain CAM costs. Nonetheless these costs can find their way into tenants’ rent statements.

Additionally, overcharges can also be based upon overstating the size of a tenant’s premises. Since calculation of a commercial tenant’s base rent and pro-rata share of CAM costs are generally based upon the square footage it occupies, a lease audit ensures that square footage is accurately stated in a tenant’s lease.

Red Flags

There are many potential “red flags” that experienced lease auditors look for that indicate overcharges, and the need for increased scrutiny. One of these red flags can be a tenant’s “gut feeling” that they are being overcharged. In fact, if a tenant thinks something is wrong, it probably is!

Unfortunately, commercial tenants are frequently overcharged. Whether or not deliberate, errors do occur. Therefore, if a tenant has any questions or hesitations about its lease charges, a lease audit should be undertaken without delay.

What is a LeaseWatch  Lease Audit?

A LeaseWatch lease audit is a complete review of every provision of a commercial lease upon which a landlord claims entitlement to payment. For example, rent is generally calculated on the basis of total square footage that a tenant occupies. Most tenants rely on their landlords’ representations regarding the total number of square feet they lease. A LeaseWatch lease audit ensures that the square footage representations in our clients’ leases are accurate. Additionally, there are a host of potential causes for Common Area Maintenance (CAM) overcharges. These causes range from outright landlord dishonesty to simple computational errors. Our audits uncover these overcharges.

The LeaseWatch approach to lease auditing

LeaseWatch utilizes a team approach to audit leases. Our multi-disciplinary approach is uniquely thorough and produces results that are impossible to refute.

Shortly after we are engaged by a client, we undertake a thorough analysis of that client’s lease, and develop a customized Lease Audit Plan. That Lease Audit Plan becomes the roadmap for our engagement.

Soon after our Lease Audit Plan is developed, we make a series of requests upon our client’s landlord for documentation necessary to substantiate CAM charges. While we await the landlord’s reply, we initiate efforts to verify the exact size of our client’s premises.

Finally, we turn over all data collected, along with a detailed report prepared by LeaseWatch, to our accountants for final audit computation. They calculate any amounts due our client. Equipped with this information, we are in a very strong position to recover any overcharges that we have identified on behalf of our client, our ultimate goal

Should you want to know more about how we approach a commercial lease audit, do not hesitate to call us at 561-998-2800, or contact us online.