Lack of communication between tenants and landlords is a common issue for multi-unit operators, especially when it comes to obtaining past-through data necessary for auditing occupancy costs (OC). However, there are ways to boost responsiveness and reduce your heartburn.
- Build Audit Rights and Response Parameters into the Lease – Ensure that all leases include the right to audit pass-through expenses, as well as the requirement that backup documentation must be provided with the invoices. Also include the time frame in which both parties must respond (typically 30-days), along with penalties for noncompliance.
- Document all Correspondences – From a legal standpoint, always obtain proof that an event occurred. Put your request in writing via email or a certified letter, and during calls, reference the written request. In the unfortunate event that litigation occurs, a “paper trail” is critical.
- Benchmark Costs Against Other Tenants – If the landlord isn’t providing reasonable responses to audit requests, ask your lease administration software provider for the data needed to benchmark your OC against that of similar businesses. If you don’t have a software partner, obtaining benchmark data is more time-consuming, but can be done by getting to know fellow tenants and finding out how much they’ve been charged.
- Understand What Expenses Should be Charged – Line items in landlord invoices are not always consistent, so it’s important to know what charges to expect. A professionally abstracted lease will make you aware of what items to look for, as well as simplify the reconciliation process.
- Seek Alternative Contacts – If there’s no response from your assigned contacts in the landlord’s organization, leverage your own business partners or find new contacts on their website. Also try the human resources office to confirm that the contact is still with the company.
- Add Audit Information Requests to the Estoppel – If the landlord has been unresponsive and audit language isn’t included in the lease, the next time there’s an estoppel request for a unit, take that opportunity to add tenant-friendly audit rights to the estoppel. It’s more difficult to ignore than an email request.
- Copy Lender and Management Agents – When dealing with an unresponsive managing agent, it may be effective to copy the lender and center owner on all correspondences. The last thing a managing agent wants is for those higher up in the organization to know they’re not doing their job.
By employing a few simple strategies, you can boost the likelihood of obtaining the necessary pass-through data from your landlord. And if all else fails, add favorable language to your leases during the next renewal period that will legally require a faster response time. But remember, tenants, just like landlords, have industry reputations. Polite persistence goes a long way toward obtaining needed information and preserving your reputation as a desirable tenant.