How Can Tenants Proactively Manage Lease Expenses and Mitigate Financial Risks?

The learning session on March 26, 2025, covered a lot of ground, thanks in part to the great questions raised by attendees. Below is a recap of key takeaways and actionable insights.

During our session, we learned that there is no standard practice for how landlords operate their buildings or assign proportionate costs. With so many leases, the chances that your year-end statement doesn’t align with your lease are high.

Key Takeaways:

1. Some landlords run their buildings efficiently and lean, while others focus on upgrades and amenities to stay competitive. As a result, additional rent costs can vary significantly from building to building. Your lease should include language that allows you to review and question these costs – particularly for administrative fees – some landlords charge both an administrative and a management fee, utility fees – are you paying more than your proportionate share?, and capital expenditures – how are they being amortized?
   
   
2. To protect your right to a review, your lease should include a Review Right clause, which states that you have the right to review the landlord’s statements. Without this clause, a landlord can prevent you from challenging your statement.
   
   
3. Your lease should also specify how disputes will be resolved. If you and your landlord disagree on certain costs or billing practices, resolving the issue through a neutral third party, instead of going to court, which can be time-consuming and costly, is a more efficient option.
   
   
4. While it’s good practice to review statements regularly, catching a $7K error in year one is much easier than a $70K error after five years – there are four key instances when a Lease Expense Review is crucial:

• If the building has been sold and the landlord is changing
• If the property manager is changing
• If major renovations are taking place
• If there is a significant vacancy in the building

The bottom line: Every penny counts. Without a thorough review, you may be overpaying.

Curious how your additional rent estimate compares to other buildings? Sign up to receive our Lease Expense Review Report.

If you have any questions about lease expense reviews or anything specific to your lease, we’d be happy to connect you with one of our Lease Expense Review specialists or real estate experts.