Pre-lease commencement analysis
A pre-lease commencement analysis is a review of a lease, and of the costs it will create, before the lease term begins.
It checks that the key dates, payment terms and responsibilities in the lease are clear and match what the parties agreed.
This entry is part of the Fairview Audit glossary. It explains the term in plain words. Practice differs between firms, so treat this as a general description.
Why it matters in a cost review
Most lease problems begin with the lease itself. A vague clause or a wrong date at the start can create charges for years. Reviewing the lease before the term starts, or as early as possible, is much cheaper than fixing the billing later. Language that is not settled before signing is hard to change afterward.
A cost review that begins at commencement can also set a baseline. The reviewer records what the lease says the first payments, deposits and allowances should be, so later invoices have something to be tested against. Partner firms in our network cover this within lease audit and compliance.
A plain-words illustration
A business agrees to lease a new store. The lease says the term starts when the landlord delivers the space. Rent starts a little later, after a period for the business to prepare the space.
Those are two separate dates, and the whole payment schedule hangs off them. If the landlord's first invoice starts rent on the earlier date, the business pays for time it was not meant to. An early review would have written both dates down and checked the first invoice against them.
What the analysis typically looks at
The commencement date marks when the term begins, and it can differ from the signing date and from the date rent begins. Beyond dates, a review commonly checks:
- the term, renewal options and any early exit rights
- base rent and how it changes over time, including any escalation clause
- how shared building costs are billed and later settled
- deposits, allowances and rent-free periods
- who is responsible for repairs, taxes and insurance
- what condition the space must be in at delivery
The goal is a plain summary of the obligations, often in the form of a lease abstract. Whether a firm builds that summary as part of this service is for the firm to state. [CONFIRM: a partner firm supplies and approves how it defines and performs this analysis]
How it shows up in a review
The firm usually asks for the draft or signed lease, any amendments, side letters and the first invoices. It then lines up the lease terms against the first billings. If the review happens before signing, the firm may suggest questions for you to raise with the landlord, and you decide what to ask for. Negotiation is between you and the landlord.
Where a lease touches accounting, such as how lease costs are recorded, your accountant is the right contact. [VERIFY: confirm with your accountant any reporting effects of the lease start date]
Common mistakes
- Reviewing too late. Once the lease is signed, you have fewer choices.
- Confusing the dates. Signing, possession, commencement and rent start can all differ.
- Skipping the first invoices. Early billing errors can repeat each month.
- Leaving verbal promises out of the document. If it matters, it should be in writing.
- Storing the lease without a summary. Key terms are easy to forget without one.
- Forgetting exit terms. Check how an early termination option works before you need it.
Tip: Write down every date in the lease on one page and give a copy to the person who approves rent invoices.
Related terms and pages
Fairview Audit connects you with finance professionals and partner firms. The partner firm performs any review, and the engagement and fees are between you and the firm.
Tell us what you need reviewed. We match you by hand with an independent partner firm. You keep your existing vendors.Find out what you are overpaying.