NetLessor - Capturing Contract Provisions
Use Case: Users can realize significant value from having their leases tracked within a single unified system—well beyond the benefits of streamlining accounting processes. NetLessor allows users to capture additional information related to the lease record, including lease Contract Provisions. Each contract provision is captured as a child record of the lease and NetLessor users can aggregate and report on those contract provisions across their entire lease portfolio, allowing for simplified disclosure reporting as well as lease management.
Users can capture as many contract provisions for a lease as they would like.
KEY CONTRACT PROVISIONS DETAILS
Contract provisions represent legal provisions that make up certain clauses or conditions within a lease contract. The most common contract provisions requiring disclosure include the primary types in the Contract Provision Type field:
- Lease Renewal Option
- Lease Expansion Option
- Lease Termination Option
- Lease Purchase Options
Additionally, other contract types can be captured within the Other category, which include the following (this list can be expanded within the NetLessor Other Clause Type list):
- % Rent Clause
- Alterations
- Assignment
- Guarantor
- Holdover
- HVAC
- Insurance
- Late Charges
- Notice Period
- Notices
- Other
- Parking Rights
- Permitted Use
- Price Increase Caps
- Relocation
- Repairs & Maintenance
- Right of First Offer
- Right of First Refusal
- Security Deposit
- Sub-Leasing
- Tenant Estoppel
- Tenant Improvement Credit
Once a contract provision is created it can then be reported upon with searches, dashboards, email reminders and any other native NetSuite reporting. That way, you can ensure you never miss a key date
STEP BY STEP PROCESS
- After navigating to a lease record for which you would like to add a contract provision, select the create new icon at the top of the screen and select NetLessor Contract Provision (alternatively you can create new contract provision from the Contract Provisions tab on the far right subtab: NetLessor Contract Provisions)
- Within the new NetLessor Contract Provision record, complete the fields as appropriate:
| Field Name | Description | Example |
Contract Provision Key Information | ||
Contract Provision Type | Indicates whether the contract renewal is one of the primary disclosed provisions under the new lease accounting standard. These selected types are separately grouped within the Contract Provisions sublist on the standard NetLessor form and included within the NetLessor standard reports | Lease Renewal Option |
Sub-Type (If “Other Contract Provision”) | Provides a more comprehensive listing of the other contract provisions that may be relevant for a lease contract. Note that this list is sourced from the bundled list NetLessor Other Clause Type. If a type is not included in the listing, it can be subsequently added by an administrator. | % Rent Clause |
Contract Paragraph / Reference | Refers to the specific section of the Lease Contract where the provision details are located | Section 2.a.(1) |
Key Provision Date (Exercise by / Release Date) | The date by which the provision must be exercised. This is the date most commonly reported upon as it represents the final chance to exercise a provision | 6/30/2021 |
Key Provision Amount (Purchase, Penalty, etc.) | The sum of any amounts associated with the contract provision, whether for purchase, penalty, incentive, etc. If the amount is formula, it is typically captured in the Clause Detail/Notes section | $25,000 |
Clause Detail / Notes | Long-text field to capture any relevant information about the clause not captured elsewhere | Clause must be exercised in writing |
Exercised Provision Details (to be completed upon exercise or when becomes effective) | ||
Provision Exercised Date | The date on which the clause is exercise or the clause conditions are met | 4/1/2021 |
Provision Exercised Notes | Long-text field to capture any relevant information about the exercise of the provision | Submitted & confirmed by Ray |
Option Additional Terms (to be completed if type is option) | ||
Option Available Date | The earliest date at which the option can be exercised | 1/1/2021 |
Option Term, (Full Months) | Additional term to be provided for under the option agreement | 24 |
New Lease End Date After Exercise | The update lease end date after exercise of the option agreement | 3/31/2021 |
Likely to Exercise | Yes/No checkbox to indicate whether the option is likely to be renewed. Note that while this is necessary for disclosure reporting, adjustments to the primary lease schedule term and dates must be manually adjusted; selecting this box will not trigger adjustment to the lease record terms | No |
Auto-Renewal / Evergreen Contract | Yes/No checkbox to indicate whether the option represents an auto-renewal or evergreen contract | No |
Guarantor Additional Terms (to be completed when “Guarantor” sub-type is selected) | ||
Guarantor Name | Sources from contact list and represents the guarantor of the lease; a new contact can be created directly from this record | Rick James |
Guarantor Release Date | Indicates the date at which the Guarantor is released from their obligation | 1-Apr-2025 |
Guarantor Released | Yes/No checkbox to indicate that the guarantor has been released from their obligations | No |
- Additional documents or relevant information for the contract provision can also be entered or uploaded to the documents tab
- Select Save to save the record associated with the lease
UPLOAD CONTRACT DOCUMENTS & OTHER FILES
Use Case: NetLessor can capture and associate any relevant documents or contracts related to a lease and store/link to the lease record
STEP BY STEP PROCESS
- During initial lease creation or in edit mode of any existing lease record, select the Documents subtab
- Press the New File button to upload contracts or other files that you would like associated with the lease to the NetSuite file cabinet or press the Attach button to attach a file that already exists in the file cabinet to the lease.
CAPTURING MODIFICATION OPTION DETAILS
The section is not used during the initial lease setup. Modifications that are made during the lease term are displayed on this tab. Modifications cannot be triggered prior to lease commencement and monthly journals have been run. Modifications should be performed using the Modify Lease button on the lease record.
CAPTURING TERMINATION OPTION DETAILS
The section is not used during the initial lease setup. Terminations that are made during the lease term are displayed on this tab. Terminations cannot be triggered prior to lease commencement and monthly journals have been run. Terminations should be performed using the Terminate Lease button on the lease record.