In commercial real estate brokerage, the use of a tenancy schedule in property control is quite common when it comes to larger office, retail, and industrial properties. That being said, there are some dangers to understand with the schedule process.
The schedule itself should contain the entire relevant lease and tenant detail for the asset and it will form part of the property management system. An accurate schedule is a valuable control tool for landlords, property managers, and leasing agents; they are always used when addressing tenant mix concerns or business planning the asset.
So there are some issues here to understand about these schedules. The common problems with tenancy schedules are that they are not well maintained or completely accurate; they cannot be relied on. Whilst they may be created from the original lease detail entered into the ‘property management software system’, accuracy in the process is commonly missing over time.
What should happen?
The property manager and or the lease administrator should be keeping things in the schedule up to date in all respects, but that doesn’t happen 100% in practice. The longer a property is managed, the greater the potential for omissions an errors.
So what is the issue here?
There are always challenges with this property control issue. Here are some common facts to understand about tenancy schedules:
- ACCURACY: Some property managers do not read leases accurately and therefore will overlook critical dates and or lease clauses. That will then impact the tenancy schedule content and details.
- LEASE DETAILS: The terms of leases will change over the duration of occupancy and on that basis the lease schedule should be updated. Lease rent negotiations, options, reviews, extensions, and discussions will all impact the schedule detail. They should all be updated.
- RUBBISH INFORMATION: There is an old saying about accuracy that basically says that ‘if you put garbage information in something, you get garbage out’. That rule certainly applies with commercial and retail property tenancy schedules. You never really know if the person who originally put the property data into the system actually knew what they were doing and the importance of the process. Perhaps they did not intend to apply accuracy in the process; perhaps they were having a ‘bad day’. That will then have a flow through effect to the lease critical dates into the future.
These three facts lead to a common property challenge of errors and omissions. If someone gives you a tenancy schedule as part of any property review, lease or involvement, ask if you can verify the critical facts that will impact your future tasks and involvement.
Don’t act solely on the face of the information provided; check things out by looking at the leases before you make any decisions or spend too much time in tenancy analysis. When in any doubt have the property manager or property owner certify that the details in the tenancy schedules are correct.
Property Handover Concerns
This issue is a real challenge when a ‘property handover’ is underway as a new property is being taken into a property ownership or property management system. Never rely on the face value of the information on the tenancy schedule. Always question what you are seeing and doing with tenant and lease documentation. Check all your critical dates from the tenancy schedules so you know that you are ready for upcoming lease and tenant activity.