The Two Most Important Dates For The Perfect Lease Expiry
“I’m late, I’m late for a very important date”. The White Rabbit would be in a lot of financial trouble if he started leasing his pocket watches.
Timing is key when it comes to leasing. Paying your lease rentals early can sometimes come with benefits, whereas lateness can be heavily penalised. The length of a lease agreement can vary dramatically; ranging from under 12 months right up to the infamous 999-year lease. The longer the lease, the more chance there is that these important deadlines will be lost and forgotten as companies evolve and staff move on.
Failure to keep track of these dates can very quickly turn a solid, well negotiated lease agreement into an expensive hassle. These dates are vital to the success of a lease agreement so get out your calendars and make a note of the following important deadlines for your lease expiry.
End of lease date
This signifies the end of the period covered in the lease schedule. Unless agreed otherwise, this is typically when the lease is terminated, the equipment must be returned to the lessor and all loose ends need to be addressed. If the lease is continuing to a secondary term, the end of lease date may be used to signify the beginning of the revised secondary lease schedule.
It is important that all end of lease decisions and procedures are in order to avoid accusations of breaching your contract’s stipulated return conditions. Failure to meet this deadline can lead to penalty fines and sour the relationship between you and the lessor.
This is the date by which you need to inform the leased asset provider of your next actions. Whether you wish to continue to lease at a revised secondary rate or you would like to return the assets and terminate the lease agreement, you need to provide suitable time for the lessor and yourself to make arrangements. This deadline will be included in your lease schedule and it is vital that you stick to it. Missing this date can have drastic consequences that can restrict your end of lease options. This is particularly problematic if you are considering extending the lease as you begin negotiations at the disadvantage of failing to meet the terms of your last lease schedule.
If no action is take, many lease schedules include an extension clause where the contract will continue at the current primary lease rate. Not only can this be needlessly expensive, but depending on your negotiations at lease inception, it may be complicated and costly to correct.
It is more common than you would think for industry respected brands to have assets under a lease that never ended. These companies are paying primary rates for equipment that they might not even be using; they might be forgotten and lost in storage or maybe even unknowingly trashed. There are huge potential savings opportunities as these market leaders unwittingly spend thousands of pounds on expired leases they are not aware have ended.
Ending a lease is a notoriously underestimated aspect within the leasing process, with many companies growing complacent as a lease enters its final stages. However, it is important to remember that an expiring lease requires suitable consideration and time to ensure you do not leave yourself susceptible to unexpected charges or compliance problems. Lease management software not only allows you to instantly automate reports on all your upcoming expiries, but also allows you to facilitate your end of lease decisions and send them directly to the lessor well within the notice date.
Innervision’s lease management software, LOIS, provides numerous notices to clients so they can be sure they will never miss an end of lease action again. As the system centralises all lease activity with cloud-based data management, these dates are far less likely to go forgotten or be missed if the person working on a specific lease has changed or if out of the office.
In fact, Innervision recently redeveloped our end of lease procedure within LOIS, making it even easier to complete the necessary end of lease actions well within the deadline, giving you peace of mind and saving your business money. If only the White Rabbit had been so organised, he may have avoided the wrath of the Queen of Hearts.
To find out more about how Innervision helps world leading brands achieve successful end of lease transitions, click here.