Avoid Overpayments with Audit Right

“A typical landlord won’t object if you ask for an audit right in your lease to avoid overpaying. After all, there is no justification for pushback other than wanting to cheat you. But while landlords generally don’t refuse to give tenants an audit right in a lease, you will have to negotiate what your right will include and how you will protect yourself if errors are found—crucial items that may ultimately be hard won.”

Be Prepared for Hotly Contested Issues

Be aware of these four issues, which are commonly at the center of many lease audit right negotiations. Make sure you’re prepared for them.

Issue #1: Type of lease auditor. For example, one of the most hotly contested issues will be whether you may use a lease auditor who works on contingency. The landlord probably will insist on a certified public accountant being paid on an hourly basis, rather than someone who gets paid based on the amount of money he saves for the tenant, to perform it.

Issue #2: Threshold requirement. Another controversial issue is the threshold requirement for the landlord to pay for your audit. For example, if the landlord agrees to be responsible for reimbursing you for the cost of the audit if its errors reach a certain amount, what will that amount be? How erroneous do the charges have to be to trigger the landlord’s obligation to pay? This is critical for you to negotiate because it could save a substantial amount of money later.

Issue #3: Frequency of audits. The landlord will also probably want to impose….


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