What is a lease audit?
A lease audit is considered a “Best Practice” and consists of a thorough examination of a real estate lease contract and all related documents and charges associated with that agreement. Each lease, tenant, landlord, and location offers a different set of circumstances. Accordingly, each lease contract requires a comprehensive analysis by experienced lease audit professionals to determine if the specific terms of the lease have been properly adhered to.
If discrepancies are identified between the terms of a lease and the amounts being billed by a landlord or paid by the tenant, then the discrepancies are communicated to the landlord and the overpayments collected.
What are examples of the different types of recoveries that may be found in a lease audit?
The Symphony Group could write volumes as to the different types of billing errors and other savings opportunities we have identified and recovered. Although the terms and obligations of each lease are different, some specific areas where opportunities may exist include:
Adjustments to PRS
"Less Majors" Calculations
Management and Admin Fees
Depreciation & Amortization
Base year Issues
Water & Sewer Charges
Repairs & Maintence
Tenant Specific Charges
Commencement date issues
Real Estate Taxes
What if I do not have the time and resources to dedicate to a third party lease audit?
The Symphony Group approach is to independently drive the lease audit process while keeping its clients informed each step of the way. Each client desires a different level of involvement in the lease audit process and we cater to each client’s needs. It is always our priority to minimize our client’s time requirement when conducting our lease audits. We understand the numerous responsibilities our clients have and pride ourselves on our ability to minimize our client’s time commitment.
If our company reviews landlord charges internally, do I still need a third party lease audit firm?
Most companies review their landlord billings internally. Despite this internal review process, there are still many opportunities available for savings and recoveries. Internal resources normally do not have the time and focus required to identify all recovery opportunities.
Our experience allows us to recognize recovery opportunities and other issues that are not readily identifiable by a normal internal desktop review. Our professional experience also allows us to properly communicate and collect these recovery opportunities once they are identified.
What are the benefits of a lease audit?
Tenants receive numerous benefits by having a qualified independent third party lease audit firm perform a thorough review of their real estate lease portfolio.
The most obvious benefit in performing a real estate lease audit is the direct financial recoveries that are obtained. By reviewing a lease portfolio and the associated related charges, billing errors and savings opportunities almost certainly are identified. These billing errors are then collected from the landlord and favorably impact the tenant’s bottom line.
In addition to the historical monetary recoveries obtained by a lease audit, a tenant will also achieve substantial future financial benefits from these identified savings opportunities. We estimate that for every dollar The Symphony Group recovers, our clients save an additional three dollars over the remaining term of the lease. Although this is just an estimate based on our historical analysis, it demonstrates that the benefits of a lease audit endure well beyond the historical recoveries we obtain.
Beyond the quantifiable historical and future savings The Symphony Group generates, we also are able to provide a substantial “information exchange” for our clients. Through our experience of having audited thousands of leases, we are able to educate our clients and assist them on how to better identify and collect billing errors and other savings opportunities. This education allows our clients to identify possible overcharges before they are paid.
This proactive approach allows our clients to save significant future dollars. After the completion of a lease audit initiative, The Symphony Group will also assist our clients with recommendations for improving lease language in future leases and renewals.
Will a lease audit affect my landlord relationships?
No. The Symphony Group is extremely careful not to disrupt the important relationship between a landlord and its tenant. Our professional approach is part of what has distinguished us as a leading provider of lease audit services. We never assign blame or make accusations when collecting possible billing errors. We simply apprise the landlord of the discrepancies and work with them in a professional manner to collect the amounts due. A thorough review of your lease terms by a qualified third party audit firm also puts your landlords on notice that you understand, as the tenant, the complex nature of your leases and are putting forth effort to ensure their strict compliance.
As an additional assurance of protecting client landlord relationships, The Symphony Group presents all initial claim letters to the client for approval. This allows our clients to be kept up to date on our progress and to review the claims as they are being submitted.
What causes billing errors to occur?
There are numerous reasons billing errors occur. Most billing errors are unintentional and the result of simple clerical errors, misinterpretation of lease language or lease language that contains deviations from a landlord’s normal billing practices. Each lease and location contains a different set of terms, conditions and circumstances. Leases today can be very complex. Landlords often have thousands of tenants and the billing of extras per the terms of each individual lease can be a very complicated process. The correct billing and determining the proper financial obligations of the parties involved can be a difficult task.
Over the last several years there have been a significant amount of mergers and acquisitions in the real estate area. It is not unusual for a shopping center or office building to have been sold several times during a five year period. Each landlord has a different methodology of billing extra charges to their tenants. The burden is on the tenant to make sure each billing is in accordance to the “four corners” of their lease.
What percentage of leases audited results in The Symphony Group identifying recovery opportunities?
This varies greatly by client and lease type. It is not unusual for The Symphony Group to identify saving opportunities in 33% to 50% or more of all real estate leases audited
Why is The Symphony Group able to identify and recover billing errors when our internal resources perform the same function?
There are numerous reasons The Symphony Group is able to identify and collect real estate lease billing errors and other savings opportunities.
EXPERIENCE – The Symphony Group has audited thousands of real estate leases and understands where the opportunities exist. Since every lease, location and landlord billings offer a different set of circumstances, our experience allows us to properly identify, articulate and collect billing errors and other savings opportunities.
FOCUS – As third party real estate auditors, we are able to focus solely on identifying and collecting possible billing errors for our clients. We do not have other responsibilities normally related to the lease administration function. This allows us to spend as much time as required to identify and collect savings opportunities.
PATIENCE – The Symphony Group has the patience and tenacity to pursue a claim as long as necessary until it is settled for the benefit of our clients. This resolve is critical for the completion of a successful lease audit. Whether it takes two weeks or two years, The Symphony Group will actively pursue each claim until it is beneficially resolved for our clients.
How does The Symphony Group differentiate itself as a leading provider of lease audit services?
This is a question that would be better answered by our long list of satisfied clients.
The Symphony Group approach is to dig deep in the audit of each lease file. We go well beyond the normal CAM audit by reading each lease, along with the supporting documentation, in its entirety. We also research public databases and other available resources to determine the existence of possible billing errors. We are also not afraid to undertake complex issues that would benefit our clients. Our primary goal has always been to be a valued resource for our clients. Beyond our real estate lease audits, we also assist our clients in many other ways. This includes education, training, staffing, lease abstracts, data verification, lease administration, lease advisory services, special projects and other real estate services as needed. We also make ourselves available to our clients to answer questions and to be a resource regarding real estate issues that they may have that are not related to our specific lease audit initiative.
How does a contingency fee arrangement work?
During a real estate lease audit, The Symphony Group is compensated solely on the savings we secure for our clients. There is no risk to the tenant. If no savings are identified and collected, there is no fee for our services. It is truly a win-win situation.
Does The Symphony Group perform other non-contingency fee work?
Absolutely. The ultimate goal for The Symphony Group is to be a valued resource for our clients. We offer many other fee based services including real estate consulting, lease language advisory, database management, lease abstracting, ligation support, and other real estate services as needed.
The Symphony Group will also conduct a lease audit on a fee basis if desired by our clients