lease audit

Lease Agreements, Auditing, Lease Audit, CAM Audit, Operating Expense Audit, Dallas Texas, California, Nationwide


Lease Agreements, Auditing, Lease Audit, CAM Audit, Operating Expense Audit, Dallas, Fort Worth
Lease Agreement Audit, Lease Auditing, Lease Audit, CAM Audit Service, Dallas, Fort Worth

Occupancy costs are a significant fixed expense and long-term financial commitment for most companies.  A large component of most tenant lease agreements include a tenant’s obligation to share in building operating costs, tax and utilities over the lease term.  Landlords account for the cost to operate each individual building and charge back or pass through these costs to tenants on a pro rata basis.  The accounting process can be complex, particularly when tenants have separately negotiated lease agreements.  As a result, errors do occur, and the burden is on the tenant to review and contest over charges.

Common pass through expenses:

Real Estate taxes / Utilities / Janitorial / Landscaping / HVAC / Improvements / Repairs /  Capital improvements / Security Systems / Salaries / Advertising / Signage / Exterior painting / Plumbing / Electrical / Sewer / Insurance

What is a Lease Audit?

A Lease Audit is sometimes referred to as a CAM audit or Operating Expense audit. It is a contract compliance engagement that includes an inspection of a landlord’s accounting records to ensure tenants are billed for the appropriate share of a building’s operating expenses and taxes.  Expenses are determined in accordance with each lease’s specifically negotiated provisions and generally accepted real estate accounting practices.

CTMI's 4 Step Audit Approach

PLAN > CTMI performs a review of the lease portfolio, lease agreements and any other salient matters with respect to existing landlord relationships and business considerations.  We abstract key provisions along with a trending of expenses and comparison to market data. We recommend course of action – full field audit, desktop audit, or no audit.


 > Depending on the audit approach, CTMI performs comprehensive reviews of pass through charges for appropriateness.
     *Desktop audit - involves a detailed review of the landlord’s accounting records for only those expense categories identified as having potential issues. 
     *Full field audit - involves a detailed review of all expense categories and direct billings for above standard services, as well as a property tour aimed at further identifying potential expense reimbursement issues.
RECOVER > After performing our audit procedures, we draft report identifying potential issues along with the relevant lease language and supporting mathematical calculations. Report includes our commentary on the strengths and weaknesses of each issue. Once approved, we finalize for landlord submittal. CTMI diligently follows up with landlord to obtain a written response. With the client’s approval, we work with the landlord to resolve issues and obtain a client recovery.
IMPROVE > A benefit to conducting a lease audit beyond the recovery of overpayments is the lease summary prepared by CTMI during the audit course, the increased knowledge and awareness of potential issues and the improved internal control process on a go forward basis.

Most every company has an office lease agreement. If your company has one or more leases exceeding 20,000 square feet, you should consider the benefits of a lease audit. We are primarily engaged on a contingency basis aligning our interest with our clients. Let CTMI recover your lost profits!