Understanding Lease Amendments
A lease amendment is any change made to an active lease for which you alter the fundamental obligations and entitlements of the lease; that is, you change or add to the lease values that you specified in the Maintain Lease component. Use the Management Amendment feature to amend a lease. Before you create an amendment to a lease, you must first understand the difference between maintaining and amending a lease.
Maintaining a lease consists of changing certain fields on an active lease—such as lease name, lease administrator or portfolio manager, and options and critical dates notifications—without an amendment. Any changes that do not affect the fundamental obligations and entitlement of the lease can be made through the Maintain Lease component.
Fields that require an amendment can be edited only through the amendment pages. The edits that you can make through amendment processing include changing the landlord or tenant, lease timetable, property list, financial terms, clauses, and so on. You can amend the details of the lease as long as an amendment is in pending status. Before you can create an amendment, the lease must be in active or holdover status. You can create a new amendment or retrieve an existing pending amendment to edit, activate, or delete.
To amend a lease, select Manage Amendments in the Action field. The Action field appears on all pages within the Maintain Lease component. You must enter the amendment details that include the amendment type and reason. After you save the details, you can amend the lease. The system allows you to modify fields on these pages: General Information - Editing Pending Amendment, Financial Terms - Editing Pending Amendment, and Clauses - Editing Pending Amendment in the Amend Lease component. When you save the amendment, the system saves the new data in separate amendment tables and assigns an amendment number to the amendment. Just one amendment can be in pending status at a time.
Lease amendments do not affect the originating active lease until the amendment is processed, reviewed, and activated because the amendment processing and review can potentially take a significant amount of time. As a result, an amendment should not affect the normal processing of an existing active lease until you activate it. When you activate an amendment, the system sets the amendment status to active, and the values that you specified for that amendment become the current active lease values.
You can review current or previously replaced amendments on the Amendments - Amendment History page. For example, when you amend a lease with multiple amendments, you can view a change log to see what terms were changed on a particular amendment. This log summarizes the changes by the lease sections and displays the original values and the new revised values.
Decrease in Lease Scope (Partial Lease Retirement)
The lease amendment component enables you to record a decrease in lease scope (a lease modification that terminates the right of use of one or more underlying assets, partially or in full, before the expiration of the lease term). A decrease in lease scope occurs when there is a:
Decrease in property rentable area.
Full retirement of one or more assets.
Partial reduction by quantity for an asset.
Use the Decrease in Scope option to create a decrease in scope amendment. Unlike other amendments that allow you to perform multiple transactions in the same amendment, the Decrease in Scope amendment only allows you to perform that task.
Use the Decrease in ROU tab on the Create New Lease - General Information Page to select assets with a decrease in lease scope.
Note: Full lease termination and expiration are managed using Lease Actions.
For more information, see the ‘Lease Actions’ section of the Understanding General Lease Information topic.