8 Ways To Protect Against Overpaying The Operating & Tax Expense Invoice Your Company Will Soon Receive
By: Carrie S. Holstead
It’s easy to think that simply checking the math in your operating and tax expense reconciliation invoice will protect your company against overpaying… think again. A cursory review allows for the possibility of mistakes that could be costly to your company. While it takes a significant amount of time to carefully scrutinize this invoice, it must be done. However, if you are a client, send me your operating and tax expense reconciliation invoice and we will review it free of charge as an ongoing protection to your company. If you are not a client, feel free to contact me about this service.
1. Protective lease language
Your office lease will dictate the property and tax expenses that can be passed through to your company, making it essential that your tenant representative negotiate protections. For example, do you know the language that if missing from your office lease could add nearly $2.00 per square foot to your occupancy cost every year? If not, protect your company by contacting me.
2. Base year
Confirm the base year is accurate and proper credit has been given for an update, if any.
3. Percentage of the building leased
Make sure the percentage of the building leased is accurate and if there has been a change to the size of your space, the proper adjustment has been made on the correct date.
4. Size of the building
Verify the building isn’t “growing”. On a number of occasions, our organization has seen the same size building measured differently by a new owner resulting in a significant increase to the square footage.
5. Cap on expenses
Assure any cap on expenses negotiated in the lease has been applied.
6. Proper credit for estimated payments
Confirm proper credit has been provided for estimated payments made. Also, if estimated payments far exceed the actual expenses, ask why the budget was so high.
7. Reasonable Operating & Tax Expenses
Make sure operating and tax expenses are in line with the competitive market. Additionally, confirm the line items included are in accordance with your lease.
8. Sale of your building or new property manager
Understand that errors or glitches can occur when transferring information from one owner or property manager to another. As such, every number and line item in your operating and tax expense reconciliation invoice should be carefully scrutinized following the sale of your building or change to a new property manager.