understanding leases


I had a lease with only lease start/end dates specified. I used Jan 1, 2011 to Dec 31, 2011. I read in previous forum topics that when a lease expires, if the tenant is staying, create a new lease with no end date to represent them staying on month-to-month. So, I created a new lease from Jan 1, 2012 with no end date.

Now, in the Suggested Entries, I have 2 suggested entries for this unit for Jan 1 2012... one from the first lease, which is expired, and one from the second open-ended lease.

Do I really need to create the open-ended lease? What is the significance of the lease end date if a suggested entry will still come up each month? Multiply this example by many units across many 'lease end dates' and it will become very confusing. What is the significance of 'lease end date' to the program? How do I indicate to the software that a lease is complete? How would I terminate a lease early?

For move in/out dates, I assume that's just for informational purposes to track when the tenant really did move in/out? What other effects do move in/out dates have on the system?

There are several use cases for the end of a lease:
a) Lease ends, tenant moves out. New lease is created for new tenant.
b) Lease ends, tenant signs new lease
c) Lease ends, tenant stays on month-to-month
d) Lease ends early (ie: tenant is evicted or tenant breaks lease)

How should all these cases be properly represented in the software?

Thanks!
Tony

 
Hi Tony

When a tenant transitions from a lease to a month to month setup, some people prefer to create a new lease as you described whereas others just prefer to not create any lease. It's really up to you.

The reason the Scheduled Entry stays is because enough people just keep it instead of creating a new lease with just a start date. In other words it's much much easier to just select and delete the related Scheduled Entry when a tenant moves out then it is to create a new Scheduled Entry from scratch. Creating one means you have to grab and remember the information from several sources, which building, unit, their actual rental amount, etc. It's basically a convenience.

So to answer you question, you don't need to create an open ended lease if you don't want to, but if you do, you should delete the previously existing Scheduled Entry.

The main reason people create an additional lease, which we recommend, is that you can keep track of your historical information should you ever have the unfortunate luck of having to go to court with your tenant. In that event, you'll have their full history. This is also generally where the significance of the lease end date comes in. It's not so much for managing your day to day data, but for historical records should you ever require it. In effect you could leave it empty and the software would be fine with that. It's just that you've have no record of those details in the unfortunate event that something happens.

For the move-in/move-out dates, yes that's correct, it's just for informational purposes. Again, it's mostly in case you ever need to go to court for something or other. To give you an example, it's possible for a tenant to move in only a month after their lease starts, or move out before, or move out after the lease if ended. It happens. We had a lot of requests to be able to store that information and so it's been added.

For the use cases, please find my responses below:

a) Lease ends, tenant moves out. New lease is created for new tenant.

In this case each tenant has their own lease. You would of course close the old lease, enter in the move out date. Most likely the lease end date was already entered when the lease was created, but if not you can fill it in. Lastly you would go and delete the Scheduled Entries.

b) Lease ends, tenant signs new lease

Create a new lease. Delete the previous Scheduled Entry as it's no longer appropriate.

Again, this is an extra step for this use case, but it's a convenience for most people in that a lot of tenants will generally transition to month to month after a lease and it's too late after the fact. We decided to go this route only after a lot of user testing and feedback.

c) Lease ends, tenant stays on month-to-month

Either do nothing and leave everything as it is or create a new lease with no end date and delete the old Scheduled Entries.

d) Lease ends early (ie: tenant is evicted or tenant breaks lease)

Adjust the lease information as required and delete the Scheduled Entries.

Regards,
Stephan Grenier
Founder
LandlordMax Software Inc.
http://www.LandlordMax.com
http://www.FollowSteph.com
http://www.RealEstatePigeon.com
http://www.BlogBlazers.com

 
Hi Stephan,

Thanks, I understand it better now. I didn't realize that Scheduled Entries are never deleted automatically by the system. Now I understand the reasoning, and that I will have to manually delete them when tenants change over. I like the option of leaving an expired lease or changing to an open lease when a tenant stays month-to-month.

I know that I can manually change the description in the scheduled entry, but it would be good to have an option in the lease preferences to include it automatically. Even better would be to allow me to customize this (and other) automatically generated descriptions in the preferences... ie: in this case, I'd like to set it to "Rent from TENANT_NAME for BUILDING_NAME #UNIT_NUMBER"... other people could customize as they see fit. Just a thought about a possible future enhancement.

Tony

 
Hi Tony,

You're welcome. And thank you for understanding, it's great that you get the reason and benefits for going this route. Sometimes it's not obvious. It's much like why do we click on the "Start" button when we want to shutdown our computers: http://blogs.msdn.com/b/oldnewthing/archive/2003/07/22/54559.aspx

We have been considering customizations of the Description in the preference, the problem becomes that any customizations can quickly get really complex (people always ask for more). That being said, it's definitely something we're very close to offering. The big limitation is that you'll only be able to customize one string, it won't be conditional on the data that's presented.

The issue that we've been looking at is that it might not be worth the ROI compared to some other features.

But before we go there, if you're open to it, may I ask you how would you customize it. I'm asking so that we can take a specific example/use case and pull out the value, benefits and cost. Most of our discussions for this feature have been internal, so we don't yet have any real customer feedback on it. We know the cost, and we have a perceived value, but it would be great to compare our perceived value with a real world example of how someone would customize it...

Regards,
Stephan Grenier
Founder
LandlordMax Software Inc.
http://www.LandlordMax.com
http://www.FollowSteph.com
http://www.RealEstatePigeon.com
http://www.BlogBlazers.com
 
Sure!

My first customization would be the description of scheduled entries that are automatically generated when I create leases... I would make it say:

Rent from TENANT_NAME for BUILDING_NAME #UNIT_NUMBER

I will have to get back to you on other customizations... as I continue using the software, if I see any others, I'll post back here.

Tony

 
Hi Tony,

Thank you, that really does help. What I'm also going to do is some random sampling and perhaps we may even just change the default Description, and instead of making it custom, what we can do is offer a defined set of possible descriptions, much like how you can customize the dates today.

This not only makes the customization a lot easier for people to implement because you can just select rather how to create the template, validate that your template logic is correct, and so on. As well, it makes it a lot more cost effective to implement, thereby keeping the price more affordable.

So what we'll probably do is take the top 5 or so responses we get and push those as possible Description fields from the creation of leases.

Thank you again for the feedback, this really does help.

Regards,
Stephan Grenier
Founder
LandlordMax Software Inc.
http://www.LandlordMax.com
http://www.FollowSteph.com
http://www.RealEstatePigeon.com
http://www.BlogBlazers.com
 
Yes, that's an even simpler solution, and would suit my needs just fine! :)
 
Hi Tony,

That's great to hear! Now I can't promise when this will be included in the next upgrade, but the odds are pretty high it will be in the major release (or not too distant future) because it's not a major effort as described above. As well I do believe it would give a lot of value compared to the cost of implementation.

Regards,
Stephan Grenier
Founder
LandlordMax Software Inc.
http://www.LandlordMax.com
http://www.FollowSteph.com
http://www.RealEstatePigeon.com
http://www.BlogBlazers.com
 
Hello Stephan, using this topic I am trying hard to understand the relation between a Lease that is created under the Tenant-screen and the following Scheduled Entry under the Accounting screen. And I am sorry to say that I am not succesfull sofar. Suppose I have made a typing error in a Lease-definition. But I saved it, so the Scheduled Entry is allready created. Just changing the Lease definition has no effect on the corresponding Scheduled Entry. What should I do? I tried deleting the Scheduled Entry, changed the corresponding Lease and Saved it again. There is NO new scheduled entry created. So in case of a typing error: do I really have to delete the Scheduled Enntry AND the Lease definition and create a new Lease?
 
Hi Chris,

If you need to edit the lease, then you will also need to edit the Scheduled Entry. Although the software automatically creates a Scheduled Entry, you don't need to delete and re-create the lease to have it create a new Scheduled Entry, you can just edit the existing Scheduled Entry. However if you edit the scheduling values of the Scheduled Entry such as the frequency, etc., then you will probably need to manually create a new Scheduled Entry.

Basically think of them as two separate data entries. Initially they are the same but over time they can actually become different, so they need to be treated as separate items. So if you edit one, you will have to edit the other as well if they are to stay the same.

To quote the following page of the online user manual: http://www.landlordmax.com/support/index.php?pg=kb.page&id=102

Although creating a Lease automatically creates Scheduled Entries for you they are not linked because of several reasons. For example the rent can be paid late, rents can be paid after a lease is completed, etc. As well some Tenants will transition to a month to month rent without a Lease, and therefore some people prefer to just keep the Scheduled Entries around rather than having to re-enter a new one manually. Therefore, when a Tenant moves out, you will also have to delete the Scheduled Entries.

As well, for the same reasons, editing a lease does not adjust the Scheduled Entries, or any other related entries for safety reasons. For example, if it did, editing a lease would then cause your previous Accounting Entries to also be edited, which is very likely wrong and could result in a lot of issues. Therefore as stated before, although Leases do create Scheduled Entries, they are not linked to the Scheduled Entries they have created.

This is also true if you change the Tenant's Status to Past because it's very much possible to have a past tenant still owe you monthly rents from an existing lease (for example a tenant that is no longer living there but still has some time left on the lease, or a parent leasing a unit for their college kid during the summer).

As well for pro-rated rents, you will most likely have to override the Scheduled Entries as explained further in the same page:

The software tries to automate as best as it can the creation of the Scheduled Entries for you (Scheduled Accounting Entries, Invoices, and Receipts) based on the Lease information. However in some cases this automation will not work, such as when you pro-rate rents. In these cases you will have to delete the Scheduled Entries the software tried to create for you and manually create them yourself. As well, you'll need to manually create the first, and probably last, Accounting Entries, Invoices, and Receipts manually as they don't lend themselves to the Scheduled process very easily.

Therefore if you created a monthly Lease starting on the 11th, then all rents will be generated for the 11th because, and although this may not have been your intention, this is exactly what you've told the software to do. As such, the Scheduled entry will have been incorrectly generated and you will therefore have to delete it and create your own Scheduled Entry manually.

Regards,
Stephan Grenier
Founder
LandlordMax Software Inc.
http://www.LandlordMax.com
http://www.FollowSteph.com
http://www.RealEstatePigeon.com
http://www.BlogBlazers.com
 
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