LCC^SM Lease Cost Containment

Lease Cost Containment

"Lease Auditing" is generally understood to be an activity associated with insuring the correctness of certain commercial property lease costs that are passed on to tenants.

However the term includes a fatal flaw: Auditing is not a reliable process by which to identify, prove and/or recover material overcharges.

The truth is that many landlords and management companies regularly engage in intentional overcharging. They also have in place various deceptive measures that serve as a barrier to overcharge recognition and recovery. In light of the reality, auditing doesn’t cut it.

Another mistake made by tenant companies is the hiring of consultants on a contingency fee basis. In practice, such arrangements lead to “short settling” as opposed to the attainment of substantially greater value otherwise available to the tenant.

Here’s an example based upon an actual occurrence where a contingency fee, lease auditing company represented one tenant in an office building and Rosenthal represented another tenant, both tenants having the identical lease provision at issue:

The lease auditor obtained a $50,000 recovery subject to a 25% contingency fee (only $37,500 net to the lease auditor’s client) and the tenant leased 50% greater space than Rosenthal’s client.

Rosenthal obtained a $466,000 overcharge recovery against which the tenant company paid $35,000 in professional fees based upon time spent (resulting in $431,000 net proceeds to Rosenthal’s client).

But what if professional fees must be paid and there is no overcharge recovery? Not a problem; the Rosenthal method of screening and cost / benefits relationship testing pre-determines the probability and range of overcharge recovery, and the tenant’s approval is required before commencement of services resulting in larger fees.

Rosenthal’s average recovery is in excess of $300,000 per individual lease having premises of at least 10,000 square feet. The larger overcharges he has identified and recovered exceed $1,000,000 per individual lease. He also helps to insure a positive relationship between the landlord and tenant after resolution of dispute.

Importantly, a tenant can elect to trade its overcharge claim for desirable modifications of its lease provisions, such as lease term and rentable area, which may have a greater monetary value than the overcharge claim itself.

More fully informed tenant companies find that intelligently applied Property Lease Analysis along with sophisticated know-how in the area of the Overcharge Recovery Process produces benefits dramatically beyond those achievable through “Lease Auditing.”

Published Articles

Sitting On The Horn Of Plenty
I was selected to write this article on Lease Auditing by the American Institute of Certified Public Accountants

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Finding the Hidden Costs in your Office Lease Could Save You Big Bucks

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Lease Cost Containment Seminar: Qualifies for 8 Hrs AA CPE

A Full Day Seminar: Overcharges in the range of $500,000-$1,000,000 or more per individual lease are routinely undetected by even the best auditing procedures. Special training is needed and we provide it.
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