Control costs and mitigate risks with a commercial lease process review

Leasing a property can be a complex process involving negotiations, legal agreements, and ongoing management.

A lease process review is a comprehensive analysis of the lease life cycle and typically includes an examination of the lease agreement, negotiations, administration, accounting, and compliance and can be performed from the lessee or lessor perspective.

The goal is to identify and improve any weaknesses or inefficiencies in the lease process, helping you reduce costs, increase efficiency, and minimize risk.

Key areas of review

The lease process may include the following areas:

Lease agreement

The lease agreement is examined to ensure that it is legally binding and contains all the necessary clauses and provisions. This may include reviewing:

• Lease term
• Rent schedule
• Security deposit
• Renewal and extension options
• Insurance requirements
• Tenant improvement stipulations
• Common area maintenance calculations

Identifying language open to interpretation and addressing it ahead of time can reduce risk of future conflict between parties.

Lease negotiations

Negotiations are another important review area as they can impact the outcome of the lease process. A process review will include interviews with key stakeholders involved in the negotiation process and highlight areas where certain contributors should weigh in and identify any gaps in the review prior to lease execution.

Lease administration

Lease administration is also a critical area of review, as it involves ongoing management of the lease.

The review will examine the process for administering the lease, including how and if rent payments are collected, maintenance and repairs are handled, that the proper deposits and insurance are on file, and that disputes are resolved.

Checking to confirm the lease administrator is executing the responsibilities outlined in the lease is critical to maximizing income by collecting what is due, identifying training needs, and minimizing costs through preventative maintenance and strategy.