Real Estate Terminologies

A lease audit is the systematic and analytical process by which an auditor verifies that the landlord and the tenant are both in compliance with their respective contractual rights and obligations as set out in the lease.

In the lease audit industry, there are two primary forms of lease audit: a "desktop" audit and a fFull audit. A desktop audit primarily relates to asking questions. Desktop audits also request supporting documentation for certain expense categories or items related to invoices issued to the tenant. A full audit is a complete audit of the invoice and may require an onsite property inspection, an interview of landlord's personnel, and other investigatory processes.

A tenant is the party leasing space owned or leased by the landlord. The tenant is legally responsible for performing the tenant obligations, even if they’re not the occupant.

When a tenant subleases the premises to another party, the tenant becomes a sub-landlord to a sub-tenant.However, the sub-landlord still performs the obligations of the tenant per the lease with the landlord – unless the landlord authorizes the assignment of such tenant obligations to the sub-tenant or other party.

Fixed rent refers to known monetary value to be paid over a specified period during the term of a Lease. The composition of fixed rent determines the classification of a lease as a net lease or gross lease. A net lease has zero (triple net or NNN) to all (full service gross) operating costs included in the fixed rent.

Variable rent refers to an amount that is usually unknown until after the variable rent period ends. An example of variable rent is the tenant's reimbursement of the property's operating costs for a given calendar period.