When looking at a new property management for the landlord, study all the property leases in reasonable detail. This is most critical at the commencement of a new property management appointment.

When looking at property leases, you’re looking for things that impact cash flow and tenant occupancy. You are also looking for the things that expose the landlord to any risk.

Whilst every property is unique and different, here is a checklist which will be useful in the lease review process. Given the property type and location in which you operate, you can improve this checklist and use it as part of your handover procedure in property management.

1. Name and contact details of the tenant. You need to know who you are dealing with regards each and every tenancy. You also need to know who to contact in the situation of any emergency.
2. Description of the premises and the individual tenancy should be taken from the lease itself. This should also be referenced to the plans and drawings that apply to the property.
3. The permitted use of the premises will be outlined in the lease and this should be checked against the current tenant usage. Sometimes tenants stray from their permitted use which can create difficulty in the overall building occupancy. This problem is quite significant when other tenants are located in the same area or close proximity such as in a Retail Property or Shopping Mall.
4. The critical dates from the property lease should be identified. What you’re looking for is the terms of the current income and rental payment made by the tenant. You are also looking for dates and changes to the payments of rental. These critical dates should be entered into a diary system so that they are flagged for you early and reasonable responses can be created.
5. It is surprising how many rent reviews and options have been overlooked by landlords and previous property managers. When taking on a new property, part of your checking process should be to ascertain that these dates have been satisfied and actioned.
6. The tenant’s responsibility for outgoings payments will be clearly outlined in the lease. This should be checked and referenced against the rental invoice served to the tenant at the end of month.
7. Any current arrears situations or lease defaults should be identified for follow through. Any documentation supporting those matters will also be required. This is where the hand over from previous property manager is critical.
8. Details of supplementary areas and occupations should be sourced. It is the documentation supporting Car Parks, signage, storage, and any other form of special occupancy outside of the demised premises. Quite often you find these elements of occupancy separately document on licenses or side agreements.
9. Details of any guarantees provided by the individual tenancies are required. This will include director’s guarantees, bank guarantees, cash payments, and bonds.
10. The current payments of rental from each and every tenant within the building should be checked against the current lease and the last rent reviews. Only after that is done, should the rental be entered into the building accounting process for new invoicing.
11. Details of the current building budget together with the building financial history are critical when it comes to future forecasting in budgeting.
12. Copies of plans and drawings as they apply to the building are quite important for future occupancy. Most particularly you are looking for tenancy drawings as well as the ‘as built drawings’ from the original property construction phase.
13. Maintenance obligations of the tenant and the landlord as detailed in the lease should be noted.

When taking over a building, and assuming a new property management, expect the information you are given to be inaccurate and incomplete. On that basis you will be more diligent in the property handover procedure. A good property handover will make you more efficient in the coming property management activities.