Many businesses overlook a hidden cost in their commercial leases that can result in millions of dollars in wasted spending. Operating expenses such as utilities and maintenance can make up a significant portion of total leasing costs, and errors in their calculation can lead to overpayment. However, tenants have the option to review their landlord’s financial information to verify lease terms, commonly known as “lease audit rights.”
One major roadblock that tenants face when trying to exercise their lease audit rights is the requirement to hire an independent CPA firm to conduct the review. While it may seem reasonable on the surface, this actually hinders tenants’ ability to challenge overpayments. Independent CPAs are required to confirm that landlords followed the right accounting practices and applied the correct controls, making it unlikely for them to find major discrepancies.
Instead of relying on independent CPAs, tenants should seek out advocates with expertise in post-deal legal interpretation and building operations to help identify and resolve potential sources of overpayment. By renegotiating lease terms to allow for the hiring of specialized representatives, tenants can ensure that their best interests are being represented during expense reviews.
To address this issue, tenants should raise awareness about the impact of restrictive lease audit rights during lease negotiations and advocate for more favorable terms. They should also negotiate the ability to hire specialists to assess compliance with lease terms and propose fair compromises to balance the needs of both parties. By taking these steps, companies can protect themselves from unnecessary financial exposure and guide their organization to greater financial success.
It is important to note that the information provided is not legal advice, and businesses should consult with an attorney for specific legal guidance. By increasing awareness of these lease provisions, finding the right experts, and striking fair compromises with landlords, companies can avoid this source of wasted cash and better manage their financial success.
