Add a Lease and Assign a Unit

Struggling with where to begin when entering a new lease? Do you need a refresher? In this Knowledge Base Article, we give step-by-step instructions on how to add a lease in STRATAFOLIO.

How To Add A New Lease

Note: All leases must be added to one or multiple units only.

To add a new lease, follow the steps below:

1. Log in to your account
2. Navigate to the left-side navigation menu
3. Click on the Properties dropdown menu section
4. Click on the Units link
5. From inside the All Units table, click on the […] More Options button located on the first column of the table, on the same row as the Unit that the lease will be added to.
6. Click on the ‘+ Add Lease’ button located within the More Options button.

The above steps will take you to the Units index view, where you will see all the units you have access to view or edit within your organization or organizations if you belong to multiple organizations.

TIP: If you have a large portfolio with many units, use the filters above the table to search for the entity, asset, builinding or units you want to add this lease to. You can also use the SEARCH box to find the unit quickly if the unit has a unique name. This makes it easier to add lease to a unit without scrolling through the full list.

This will bring you to a page where you can put information on the lease you are adding. Once there, you can review the lease and add the relevant information into STRATAFOLIO. Have the lease nearby because you must reference it for the information to add to this page.

This page is organized into eight sections, which are discussed in detail below.

1. Tell Us About Your Lease
2. Lease Duration
3. Invoicing
4. Lease Rate
5. Lease Expiration Alerts/ Lease Renewal
6. Lease Restrictions
7. Closing Out Your Lease
8. Rentable Square Footage Override

Tell Us About Your Lease

UNIT(S) (required)

The unit you selected when you clicked “Add Lease” should appear in this block. Verify that this unit number matches the unit for the lease.

TIP: You can add an additional unit(s) in this block if the tenant is renting more than one unit. Sometimes it is useful to have both units entered here if the tenant has one lease for both units and the units are in the same building. If the tenant has separate leases, pays separate rates for each unit, or the units are in different buildings, it is usually better to enter them separately and not combine the units under one lease.

This step ensures you correctly assign the tenant to the property unit they are occupying.

For more information on units, see one of these Knowledge Base articles:
How to Add a Unit
All About UNITS in STRATAFOLIO

TENANT(S) (required)

Tenant is a required field for a lease. This is typically the name of the company or person leasing the space from you. If you have already added the Tenant information to STRATAFOLIO, click inside the Tenant block, and a dropdown list of tenants will appear. Click on the tenant for whom the lease is for.

To add a new tenant, click the blue Add A Tenant button to open the Add Tenant page. If you need more directions, please see our article on how to Add Tenants & Contacts in STRATAFOLIO.

LEASE TYPE (required)

Select from the dropdown list of Lease Types which include:

• NNN – Triple Net
  Used primarily for commercial leases, triple net means that the tenant will reimburse/pay the landlord for the actual costs of:
  • Real Estate Taxes
  • Insurance
  • CAM (Common Area Maintenance)
• NN – Double Net
  Also used primarily for commercial leases, double net means the tenant will reimburse/pay the landlord for only two items listed above. These are typically Real Estate Taxes and Insurance.
• N – Single Net
  Also used primarily for commercial leases, single net means the tenant will reimburse/pay the landlord for one of the items listed above. This is typically only Real Estate Taxes.

NOTE: Triple, Double & Single Net leases usually invoice a set amount for CAM, Insurance, & Real Estate Taxes every month. This is then reconciled and true-uped with the invoiced amount and the actual costs at the end of each year.

• Gross – A Gross lease means the tenant pays one flat rental fee. Apartment rentals are a good example of a Gross lease. For commercial properties, a Gross lease will have the cost of CAM, Insurance, & Real Estate Taxes included in the one, flat rental fee.
• Modified Gross – When a lease is primarily gross, with periodic additional fees, Modified Gross can be used.
• Sublease
• Other

LEASE STATUS (required)

Select a Lease Status option from the dropdown menu for this field. It is important to keep these updated when there are changes to the lease. Lease Status is very important information for an accurate & complete Rent Roll.

The Lease Status options include:

• Future Lease – The lease will automatically update to Occupied at the date entered for the Lease Term when entering the lease ahead of time.
• Occupied – This is when the unit is occupied.
• Expired – If the lease is not updated before the end of the lease term, the lease status will change to Expired automatically.
• Month-to-Month – This will be the best selection if the lease is continued without a new lease being signed. This will include the tenant on the Rent Roll and continue at the same rate until a new rate has been entered.
• Year-to-Year – This will be the best selection if the lease is continued yearly. This will include the tenant on the Rent Roll and continue at the same rate until a new rate has been entered.
• Notice – Available to Rent – This lease status is used when notice is given for vacating, but the tenant still occupies the unit. It will continue to be on the Rent Roll until the end of the lease term.
• Breach of Contract – When the tenant breaks the lease and moves out before the end of the lease term.
• Eviction Started – When the eviction process is started, the tenant still occupies the unit.
• Evicted – When the tenant was evicted from the premises and the unit is vacant.

Lease Duration

The Lease Duration section is straightforward. Enter the start and end dates based on the lease and amendments if applicable. Remember to make sure the start date is the commencement date of the lease.

NOTE: When a lease is extended, it is important to update the Lease End Date. If you find that a lease that was recently renewed is not showing up in the rent roll, double-check the Lease End Date to ensure that it was updated to reflect the new end date.

Invoicing

STRATAFOLIO makes invoicing quick and easy when this section is completed. The Accounting Customer is the tenant’s name created in the QuickBooks account. When invoices are created, this will be used to post the invoices into the QuickBooks file.

The Accounting Classification is used if Classes are set up in this QuickBooks account. We recommend setting up a class per asset or building and then subclasses for the units in those buildings. If this is blank, there are either no classes set up or there is no integration yet.

Lease Rate

USE LEASE DATES

This option uses the dates entered in the Lease Duration section above and applies the Lease Rate to the entire lease period. Typically this will apply to residential rentals when the lease does not include rent escalations.

ENTER CUSTOM DATE RANGE

This option is often used for commercial property rentals when the lease includes rent escalations. If you select this option, you will enter the date range for the first lease rate only. You will add any additional lease rates after entering the basic lease information and have saved the lease. Detailed information can be found in the article, How to Input Lease Rates in STRATAFOLIO.

BASE RENT (required)

Enter the dollar amount for the base rate of the lease.

Triple Net, NN, and N leases do not include CAM, Real Estate Taxes, or Insurance here. Those will be added under the Op-Exp Tab after you enter the basic lease information and save the lease.

BASE RATE (required)

There are two options under Base Rate:

1. Per RSF (Annually)
   This option indicates that the amount entered for the Base Rent is a rate per rentable square footage. STRATAFOLIO will calculate the monthly and annual rates based on the square footage entered for the Unit.
2. Flat Rate (Monthly)
   For this option, the amount entered for Base Rent should be the monthly amount stated in the lease.

LEASE AMOUNT CONFIRMED (optional)

“Yes” will always be checked for the Lease Rate entered on this page.

When you add additional Lease Rates (After you finish entering the basic lease information and click Save at the bottom of this window), you will have the option to check this button to confirm the lease rate or leave it unchecked to receive an email notification a month before the new rate goes into effect. Leaving the button unchecked will allow you to be notified that the lease rate is unconfirmed. Then you will update any lease rate escalations that may need adjustment due to negotiations with the tenant or changes to the Consumer Price Index (CPI).

LEASE RATE NOTES (optional)

Use this box for any notes about the Lease Rate. It is often used to note where the lease rate can be found, for example, “Original Lease – Years 1-5.”

LATE CHARGES (optional)

Enter any notes about Late Charges for this lease. An example entry for this box would be “Late Charges – $100 or 10% of any amount not paid, whichever is greater. NSF Fee – $25.00.” If there is no mention of it in the lease, “Late Charges – Lease is silent.” STRATAFOLIO does not calculate or apply late charges or fees for tenants automatically. This topic often leads to discussions between the parties involved in commercial leases before it is enforced. Should you need to move forward with charging the tenant a late fee, we recommend one of the following options:

• Create a one-time invoice
• Update the current invoice and add the late charge
• Add the late fee/charge to the next month’s invoice

PAYMENT DUE MONTHLY ON DAY (optional)

Enter the day the payment is due. For example, “1” is entered to indicate that rent is due on the first day of the month.

INCOME ITEM (optional but required for invoicing)

Select the Income Item to which the Base Rent will be posted in QuickBooks when the Invoice is created. The drop-down should include a list of all Income Items created and active in the QuickBooks account. The first part of the name is the Income Item. The name after the dash is the QuickBooks account name that this will post to.

GRACE PERIOD (optional)

If there is a grace period for rent, enter it here. For example, if the rent is due on the first of the month, but not late until the fifth, enter 5 in this space.

Lease Expiration Alerts and Lease Renewal

You can learn more about How Lease Alerts Work

LEASE EXPIRATION ALERT (DAYS PRIOR) (required for alerts)

The Lease Expiration Alert (Days Prior) entered here will trigger an email to you a certain number of days before the lease expires. Often notice for renewal is specified in the lease, but you can enter any number of days you would like. You will receive the email as a timely reminder that the lease is up for renewal. This is optional if the Enable Lease Expiration Alert option is set to No but required if set to Yes.

The best practice is to add an additional 30 days to the notice that the tenant needs to give. This allows the notice to arrive in time to decide whether a renewal option will be honored. For instance, if the lease states that a 180-day or 6-month notice needs to be given, the Onboarding team will put 210 days in this field. This gives the landlord a 30-day notice before the notification is required.

Lease Renewal

LEASE RENEWAL OPTIONS (optional)

This property can be set to Yes, No, or left blank. If your lease clearly states renewal options, set this property to Yes. If it clearly states that no options are given, select No.

LEASE RENEWAL STATUS (optional)

Options in the dropdown menu include:

• Communication Started
• Renewing
• New Lease Signed
• Not Renewing

LEASE RENEWAL NOTES (optional)

It is helpful to enter some notes about the lease’s renewal options in this section. For example, “Original Lease – 5 options to renew for 5 years each at rates stated in Section 12.3.” If the options are executed, this section needs to be updated. If more options are added in amendments, that would also be listed.

Lease Restrictions

RESTRICTIONS/EXCLUSIVE USE (optional)

This property can be set to Yes, No, or left blank. If your lease has any restrictions or exclusive use options, setting this property to Yes, will allow you to find all your leases that have this quickly.

RESTRICTIONS/EXCLUSIVE USE NOTES (optional)

This section allows you to document any restrictions or exclusive use that is part of the lease contract. The more information you add when setting up a lease, the more time you will save later on because all the inforatmion will be documented clearly, and can be accessed from multiple locations within STRATAFOLIO.

Closing Out Your Lease

SECURITY DEPOSIT (optional)

If applicable, enter the amount of the security deposit paid by the tenant as stated in the lease.

DEPOSIT WITHHELD (optional)

This box will be used when you close the lease. You can enter any amount of the security deposit not returned to the tenant.

REFUNDED DEPOSIT (optional)

This box will also be used when you close the lease to indicate the amount of the security deposit that was refunded to the tenant.

TENANT MOVE-OUT DATE (optional)

When the tenant vacates the unit, enter the move-out date here. This will also change the lease end date to that date and make the lease Expired.

LEASE CLOSING NOTES (optional)

You can enter any notes related to closing the lease in this box. We recommend noting any unusual circumstances that may have resulted in the termination of the lease, such as “Early termination on 12/15/2020 due to bankruptcy.”

Save the Lease Information

Once all the information above has been entered, click Save at the bottom of the popup window, and you will return to the All Units page.

View Lease Information

After entering all the initial information from the lease, go back to the Unit, click the button to see more options, and select View Lease.

This will bring you to the Lease Abstract page, where a series of tabs contain additional lease information. To review or verify the information that was entered, simply click through the tabs.

Editing Rentable Square Footage

Override the Rentable Square Footage used for a lease when the square footage stated in the lease differs from the actual building rentable square footage. This ensures accurate pro rata calculations, especially for CAM Reconciliation reporting.

When to use Rentable Square Footage Override

WHEN TO USE RENTABLE SQUARE FOOTAGE OVERRIDE

You should update the Rentable Square Footage Override when:

• The lease specifies a different rentable square footage than the building record
• CAM charges need to be calculated based on lease stated square footage
• Pro rata share calculations are not matching lease terms

This override affects how STRATAFOLIO calculates the tenant’s share of expenses and reporting totals.

How Can I Edit Rentable Square Footage or RSF?

Follow these steps to update the Rentable Square Footage for a lease:

1. From the left side navigation menu, go to Operations.
2. Select Leases.
3. Locate the lease you want to update.
4. Click the pencil icon to edit the lease.
5. Scroll to the bottom of the lease edit screen.
6. Locate the Rentable Square Footage Override section.
7. Enter the RSF as stated in the lease.
8. Click Save Changes.

Once saved, STRATAFOLIO will use this overridden value instead of the building’s default rentable square footage for calculations tied to this lease.

How to Input and Track Lease Rates

Tracking lease rates is essential to your business. This will help you avoid missed lease escalations.

It is important to enter all your Lease Rates in STRATAFOLIO, as it helps ensure you will be notified when leases are about to expire and rent escalations are due. Additionally, having the Lease Rates in STRATAFOLIO allows you to Invoice from STRATAFOLIO, saving you time and ensuring that escalations are automatically updated on the invoice.

How to Add a Lease Rate

Navigate to the Lease

In this view, you can track all past and current leases and their current lease rates. To add a lease rate, first navigate to the lease that needs to be updated. Start at the left-hand navigation panel and select Operations, then Leases. Next, select the i next to the Lease you want to update.

Add a Lease Rate

Once on the lease details page, navigate to the Lease Rates tab. On the Lease Rates tab, you will see a list of the lease rates already added to STRATAFOLIO. Select the Add a Lease Rate button to add an additional lease rate.

NOTE: You can also edit any of the Lease Rates from this page by selecting the pencil button next to one of the lease rates.

Enter Lease Rate Information

The Add Lease Rate popup appears after selecting the Add a Lease Rate button. Three sections to the Add Lease Rate popup window are discussed, below. Red asterisks indicate the required information.

Section 1: Lease Rate

The first section requires basic lease rate information and offers space to include additional notes about the lease rate. Information to enter in this section includes:

• Lease Rate Start and End Dates – The start and end dates will automatically populate to the next 1 year from the prior lease rate entered. You can update these fields as needed.
  NOTE: These dates must be within the dates entered for the Lease Term. (Find the Lease Term on the Lease Abstract tab in the image above.)
• Base Rent and Base Rate – First, select the Base Rate that applies: Per RSF (Annually) or Flat Rate (Monthly). Then enter the corresponding Base Rent in dollars.
• Lease Amount Confirmed Button – Check this button to confirm the lease rate, or leave it unchecked to receive an email notification a month before the new rate goes into effect. Leaving the button unchecked will allow you to be notified and then update any lease rate escalations that may need adjustment due to negotiations with the tenant or changes to the Consumer Price Index (CPI).
• Lease Rate Notes – Use this box for any notes about the Lease Rate. It is often used to note where the lease rate can be found, for example, “Original Lease – Years 1-5.”
• Late Charges – Use this box for any notes about Late Charges for this lease. An example entry is: “Late Charges – $100 or 10% of the amount due, whichever is larger. NSF Fee – $25.00”. If no late fee is stated in the lease, “Late Charges – Lease is silent.”
• Payment Due Monthly on Day – Enter the day the payment is due. For example, “1” indicates that rent is due on the first day of the month.

Section 2: Invoicing

The next section is for Invoicing through STRATAFOLIO. In this section, you should select the Income Item that corresponds with the Income Item you have set up in your QuickBooks. This is the line item that you post the income for rent to in QuickBooks. If this was entered for a prior Lease Rate, it will automatically be carried into this new rate.

Advantages to Invoicing directly from STRATAFOLIO:
1. STRATAFOLIO will automatically capture Lease Rate escalations.
2. STRATAFOLIO offers bulk invoicing which allows you to invoice across all your QuickBooks integrations at one time.
3. STRATAFOLIO syncs the invoices with your QuickBooks accounts.
4. Accepting invoice payments in STRATAFOLIO streamlines the process and syncs with QuickBooks.
5. STRATAFOLIO offers an ACH Payment Integration, which streamlines the rent collection process.

Section 3: Additional Charges

The final section in the Add a Lease Rate popup allows you to add Additional Charges to the rate. Examples include an extra monthly garbage fee for a restaurant, repayment of a rent deferment from a prior period, or a monthly additional parking fee. Additional Charges appear in a separate line on the invoice but are NOT part of operating expenses.

To add an Additional Charge to the invoices, choose Add Line Item or Add Additional Charge Type. If there is already an Additional Charge Type created, select the Add Line Item. If not, you will need to create the item with the Add Additional Charge Type.

Once the Add Line Item is selected, add the required information for the Additional Charges:

• Additional Charge Type – Select from the drop-down menu the charge types that have been created. If none are correct, select the Add Additional Charge Type button to add a new charge type. Then come back and select the correct charge type.
• Amount and Amount Rate – Enter the amount and choose the rate: Per RSF (Annually) or Flat rate (Monthly).
• Income Item and Income Classification – Select the Income Item corresponding to the income item on the invoice in Quickbooks. If an additional charge is added, an example would be “Storage,” “Garbage,” or “Parking Rent.” Select the Income Classification if applicable.
• Note – Add a note if needed for this rate.

Saving the Lease Rate

Once all the above information has been entered, select the Add Lease Rate at the bottom of the popup window, wait for your page to refresh, and the new Lease Rate will appeared at the bottom of the list.

Lease Rates Tips and Tricks

Some additional tips and tricks to make adding Lease Rates easier.

• After entering the first additional lease rate, you can follow the steps above and select Add New Lease Rate. This will enter the next rate to start on the day following the last rate entered. Each lease rate will be one year unless the end date is changed.
• On the bottom of the Add New Lease Rate page is a button for Create Another Lease Rate After Saving. If there are multiple lease rates to add, select this button. When saving the page, a new one will appear for you to enter the next lease rate. This is especially helpful when a lease escalates yearly!
• The lease rate end date can not go past the lease’s end date. If entering a date past the end of the lease, an error message will pop up for you not allowing the lease rate to be saved.
• The lease rate can not start before the lease starts either. The same error message will appear if the date is outside the lease start and end dates.
• When amending or renewing a lease, a new lease does not need to be entered. Update the lease terms before you can enter the new lease rates. See the Knowledge Base article How to Input a Lease Extention/Amendment for more helpful hints.

Tenant Pro-Rata Share

When dealing with NNN leases, each tenant pays their share of the rented property. This is known as their pro-rata share. When you enter a lease into STRATAFOLIO, the system automatically calculates the lease’s pro-rata share for you. You can calculate the tenant’s pro-rata share for a lease by dividing the unit square footage by the building’s rentable square footage (RSF).

What Does Pro-Rata Share Control in STRATAFOLIO?

In STRATAFOLIO, a tenant’s pro-rata share drives how shared expenses, such as CAM, taxes, insurance, and other allocatable OpEx categories, are divided among all tenants in a building.

Once the lease is set up with the correct rentable square footage and the building has accurate total RSF, STRATAFOLIO automatically calculates each tenant’s share and applies it during billing and reconciliation. Again, tenant CAM percentages are not entered manually. There is no field where you type in a tenant’s percentage of the building for CAM.

How to Calculate Pro-Rata Share

Where to find the numbers used for the calculations of the lease’s pro-rata share in STRATAFOLIO.

**Note: Please be careful when adding units or changing square footage. Changing one will affect the pro-rata share of every tenant in that building when you modify it.**

How to Override Tenant’s Pro-rata in STRATAFOLIO

In some cases, the denominator or RSF in the lease may differ from the calculation when adding up all the units in the building. This can happen if the math was rounded on the lease, additional building square footage was added, or many other reasons. In STRATAFOLIO, an override feature is possible if the pro-rata share in the leases differs from the calculated amount. You can find the override at the bottom of the Edit Lease screen if necessary. This overrides the pro-rata share for the lease by changing the RSF for only this one lease. It won’t display in the STRATAFOLIO table but will be included in the exportable report.

See the example below.

Pro-Rata Share in the CAM Reconciliation Report

The CAM Reconciliation Report, when exported to Excel, contains various pro-rata share calculations for the building, the asset, and the entity. This feature enables easy calculations for any shared expenses at different levels. If this does not apply to you, you can hide or delete rows in the Excel report as needed.