Lease audit and compliance for real estate and property
Property owners and managers sit on both sides of the lease. They bill tenants under leases they wrote, and they often pay a ground lessor or rent their own office under another lease. This page explains how a lease audit and compliance review applies to businesses in real estate and property.
Why leases matter in real estate
For a landlord, the lease is the revenue document. If the billing system does not follow it, the error lands on your income or on your tenant relationship. A recovery that is too low costs you money. A recovery that is too high invites a dispute and damages trust.
A property business may also hold leases as a tenant. A management company may rent its own offices. An owner may pay rent under a ground lease with rent resets and participation terms. Both sides deserve the same attention.
What a review typically examines
A partner firm compares the lease terms with what was billed or paid. The questions differ depending on which side you are on.
When you are the landlord
- Operating expense recoveries. Whether the pool of costs, the exclusions, any cap, the gross-up for occupancy, any administrative fee and each tenant's share are applied as the lease says. Landlords often reconcile estimated and actual costs after year end.
- Base year and stop terms. Whether any base year or expense stop in the lease was applied as written.
- Rent steps and escalations. Whether scheduled increases and index-linked changes were billed on the right dates.
- Tax and insurance pass-throughs. Whether bills sent to tenants match the underlying invoices.
- Move-in and move-out items. Free rent, allowances, security deposits and holdover charges.
When you are the tenant or ground lessee
- Rent resets and participation. Whether the amount paid follows the formula in the ground lease.
- Charges passed through by the lessor. Whether each item is allowed under the lease.
- Your own office leases. Whether the landlord's statements match the terms.
Estoppel certificates
Real estate transactions often depend on estoppel certificates, which are signed statements, usually from a tenant, confirming facts such as lease dates, rent paid and any default. They are commonly requested for a sale or a loan. A review that compares leases and billing records can help you see whether what a tenant would confirm matches your records. See the glossary entry for estoppel certificates.
What to have ready
- Every lease in scope, with amendments, side letters and commencement documents.
- Rent rolls and tenant ledgers.
- Operating expense statements and recovery calculations.
- Tax and insurance bills that were passed through.
- Ground lease or office lease payment histories.
- Estoppel certificates already collected.
- Contacts in property management, accounting and asset management.
Note: A portfolio review often starts with a lease abstract for each property, which lists the key terms in one place. A firm may build these for you. [CONFIRM: whether partner firms prepare lease abstracts for this industry]
How matching works
You submit a request using the larger business form, the smaller business form or the other form. Fairview connects you with a partner firm and does no review work. Size decides which firm fits, and Fairview matches each request by hand rather than by a fixed cut-off. The firm contacts you, you share documents and the firm reports its findings. Fees are between you and the firm.
An independent partner firm that specializes in lease audit and compliance handles this work. Fairview Audit makes the match. We do not perform the review ourselves.Who does the work
Frequently asked questions
Can a review cover leases where we are the landlord?
Yes, and also leases where you are the tenant. Say which when you submit.
Will tenants be contacted?
Only if you decide to correct a billing. You stay involved in that choice.
Is this legal advice on lease disputes?
No. Fairview does not give legal advice. Consult your counsel for disputes.
Related pages
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.