Case Study | Lease Administration

Effective Information Processing Protects the Owner
Ownership Issues
This multi-regional real estate company prides itself on its service ethic and its careful cultivation of solid relationships with tenants. This company continually improves its property administration systems to maintain and enhance those relationships. Lease administration is a key component of these systems. When its own personnel couldn’t be spared due to other assignments, the company engaged Horgan & Associates to upgrade lease administration systems at its commercial properties.

Improved Lease Files
Horgan & Associates began by conducting a thorough review of all lease files. We identified any issues with existing files including the status of properly executed lease documents, required attachments, evidence of appropriate insurance coverage, current letters of credit and guarantees, general and billing correspondence, and construction information. We created a completely new filing system, placing information in appropriate categories in chronological order and purging invalid or obsolete documents.

Efficient Lease Abstracts
After we obtained a thorough understanding of all lease provisions, we abstracted those provisions into an efficient system for documenting key language and reporting in advance on all critical dates for notice and performance of responsibilities. Horgan & Associates addressed all critical issues, such as:
  • Accurate computation and timing of rent, rent escalator, and tax and operating charges
  • Term and options/rights clauses, (extension, expansion, cancellation, relocation, and assignment)
  • Controls on use of premises, impacts on expenses or insurance premiums, environmental hazards
  • Landlord and tenant performance obligations including indemnification and insurance provisions
  • Obligations related to the surrender of space at the end of term
  • An electronic tickler system to produce automated reminders of critical dates

Successful Results
As a result of this program, this multi-regional company streamlined its lease administration processes, validated critical information in its lease files, corrected any irregularities, and insured timely response to landlord notice and action requirements. These steps improved tenant relations, reduced accounts receivable, and eliminated the potential for costly errors or omissions. When some of the properties were put up for sale, the lease administration program helped to expedite the due diligence process by eliminating doubtful information and confirming income and capital obligation information. #

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