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Why Businesses Are Getting Killed On Commercial Lease Overcharges

Just as the Corona Virus is an invisible killer, personally, I too have been a victim to another personal disease that silently changed my life: Glaucoma.  Let me explain. In the Fall of 1982, I was representing the United States in the World Championships of Tournament Bridge in Biarritz, France.  The event comprised competitors from eighty (80) different countries.  During that Bridge Tournament, I found myself making mistakes that seemed to be due to a loss of visual acuity.  When I returned back to the United States, one morning I decided to give myself a self-eye exam by first closing my left eye and staring at my wall clock. Then, closing my right eye, and staring at the same wall clock. From just a few moments, it became clear that the vision in my right eye was remarkably better than the vision in my left eye. I went to my local Eye Doctor, Dr. Robert Balfour, whose Medical practice is still in business today!  Anyway, Dr. Balfour did this test and remarked to me, “Let me do this test again.”  This is never a good sign.

After doing the eye test, Dr. Balfour indicated to me that I had Glaucoma. And, that I should see a group of specialists in San Francisco. From that date in early 1983 to the present day, I have lived with Glaucoma.  And, now, today, in these challenging times, I want to share with everyone that they too should do a self-test of their eyes, because Glaucoma, like the Corona Virus, has no signs. In the medical industry, it is called the Silent Thief.  Now, let me turn to another silent thief for any business or organization that leases it’s Office Space and/or is leasing its Land, in cases where it owns a Building it built on the Commercial piece of property that it is Leasing.  I am speaking about Commercial Leasing.

The majority of businesses and organizations in the United States currently are routinely overcharged by their Landlords on their Commercial Leases. 

Here is why.  Monolithic Property Management firms routinely buy and sell Commercial Property in their Portfolio.  When a Tenant signs a Commercial Lease, the covenants of that Lease are drawn up by the Attorney for their current Landlord, who is either an individual or a Property Management Company.  Yet; the monthly billing of the Lease is not done by the Attorney who drew up the Lease. It is done by the Property Management Company that is currently administering the Lease.  And, again, those Property Management Companies can change, year after year.  Let me continue.

When the business or organization gets any invoice from the Landlord, it generally goes to the Accounts Payable Department who pays that bill to stave off any bad relationship with the Landlord, in the same manner, that Accounts Receivable Departments pay electricity bills, so that the lights won’t get turned off by the electricity company.

The problem continues there because the Tenant is not an expert in Commercial Leases. They are not going to understand why they are getting billed. The solution is for the Tenant to retain the services of a Commercial Lease Auditor that typically works on a performance-based shared benefit basis where they split out their retrospective (past) refunds that they find and prospective (future) savings that they identify as the authorized advocate for the Tenant.  It is recommended that the Tenant find a Commercial Lease Auditor that has their own Legal Staff onboard, and also represents to the Tenant that they will present all recommendations to them before presenting it to the Landlord.

More importantly, because the human beings who are given the responsibility of administering Commercial Leases on behalf of their Landlords do the calculations for the billing and interpretation of the covenants of the original Lease drawn up by the Landlords, they are generally not Attorneys, and even if they are, they are human. Unlike a telephone bill or electricity bill that is calculated using fixed numbers from a relational database, these are individuals who are interpreting the intent of the covenants.  Commercial Lease Auditors are the only way to establish oversight.

The great thing about retaining a Commercial Lease Auditor is that in the rare instance where there are no savings found, there is no fee.

In that case, because all recommendations flow from the Commercial Lease Auditor to the Tenant, the Landlord does not even know that the Tenant had their Lease reviewed by an outside third party. More importantly, Landlords want happy Tenants.  And, the monies that the Commercial Lease Auditor is recovering from the Landlord are overcharges that would have gone on for years, unless the Tenant had retained the services of a Commercial Lease Auditor.

Commercial Leases represent the second most expensive general ledger item to any business or organization besides the Employee Payroll.  In this time of business hiatus due to the Corona Virus, the Commercial Lease overcharges continue silently to drain monies from the coffers of Tenants silently.  Its time Tenants be heard.

Ron Feldman
Ron Feldmanhttp://www.worldbusinessservices.com/
RON has been recognized by Who’s Who In California and Who’s Who In Lodging. He has taught Business Services Marketing at the Undergraduate and MBA University levels. Feldman holds an undergraduate degree in Mass Communications, as well as a Masters Degree in Educational Psychology. Feldman previously had been retained as a consultant twice by a major publicly traded NYSE payments industry company to re-engineer their order processing, and restructure their telecom costs, as he had done for the Clients of the second largest Utility Auditing Company in the World. He has saved businesses and organizations millions of dollars in performing Utility Audits, since 1994. He was also retained by another NYSE Retailer to advise them in regards to their payment solutions for their customers. Feldman received a U.S. business method patent for a transaction processing technology focused on the hotel industry that he invented while working with Citicorp in developing their global multi-party settlement system in the late 1980’s. During that era, Feldman worked with SITA/Sahara, a global Internet-based organizations of airlines and hotels, and was formerly Vice-Chair of the Association of Travel Marketing Executives. Feldman has represented the United States in the World Championships of Tournament Bridge in 1982, 1986, and 1994. He founded the first accredited organization of Professional Bridge Players. Feldman also served on the National Conduct and Ethics Committee of the American Contract Bridge League (ACBL), as well as its National Marketing Committee. He resides in Petaluma, California in the Sonoma Wine Country.

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