Lease Variation
The Lease Variation feature in Real Estate Manager records changes to a lease after the contract is created and synchronized with Lease Accounting Manager (LAM). These changes ensure accurate accounting.
When using both Real Estate Manager and Lease Accounting Manager with a contract type Lease Accounting Significant, any changes to the contract after initial setup must be made through Lease Variation and the synchronization process.
When to Use
Use Lease Variation after the contract is created in Real Estate Manager and synchronized with LAM for the following updates:
Rent schedule changes
Editing the initial term of the contract
Adding, editing, or removing renewal terms
Linking additional assets to the contract
How to Use
Open Lease Variation
Navigate to the Lease Variation drop-down.
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The first screen prompts for Date Change Was Known:
This is the date the user became aware of the change.
Only payment dates from the contract appear (future dates are blocked).
This date is critical for accounting accuracy.
Trigger Contract Modification
The screen displays a check-box: Trigger Contract Modification.
When checked, any change creates a contract modification with accounting impact.
Follow the accounting team's SOP before selecting this check-box.
Review Screen Layout
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Top Section: Displays contract details such as description, schedule number, landlord.
All fields are locked except Assets, where additional assets can be added.
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Contract Terms and Options:
Update existing terms or add renewal options by clicking Add Option.
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Set the correct Option Status:
Reasonably Certain: Highly likely the lessee will stay.
Not Reasonably Certain: Highly unlikely the lessee will stay.
Exercised: Renewal confirmed with the landlord.
For month-to-month options, leave the end date blank.
For renewal periods, invoices are only created when the renewal option is Exercised.
Contract Cost Section
Click Add Review and locate Contract Cost under Reviews and Adjustment.
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Users can edit existing costs or add new ones using these review types:
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Fixed Amount Review & Fixed Percentage Review
Step payments known at contract commencement.
Results in no remeasurement of assets and liabilities in Lease Accounting Manager.
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Market Review
Payment changes occur after the initial contract is signed, based on market conditions.
After synchronization, leads to remeasurement of assets and liabilities for both US GAAP and IFRS in Lease Accounting Manager.
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CPI Review
Payment changes occur after the initial contract is signed, based on agreed index rates.
After synchronization, leads to remeasurement of assets and liabilities for the IFRS ledger only in Lease Accounting Manager.
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Cost Adjustment
Used only in specific cases, such as when removing certain cost line items from the contract cost section.
Does not lead to any remeasurement of assets and liabilities when the updated information is synchronized with Lease Accounting Manager.
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Important
Market Review- Remeasurement under all standards.
CPI Review- Remeasurement only under IFRS.
Fixed Amount / Percentage / Cost Adjustment- No remeasurement.
If rents are agreed and communicated to the landlord and the contract is updated with the latest rents, action the review.
If the rent amount has not been updated in the contract, keep the review as Pending.
All invoices will be updated once the review has been actioned.
Date Change Was Known Field
When entering a Market Review or CPI Review in the Lease Variation screen, a field called Date Change Was Known appears.
Purpose
This field captures the date when the lessee became aware of the rent change.
It is primarily used for accounting purposes to ensure accurate reporting.
Rules for Entering the Date
If certain of the date, enter it.
If uncertain, leave the field blank.
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The date cannot:
Be in the future.
Be before the contract start date.
Impact of Lease Variation Changes
| Action | Impact |
| Rent Change Only | Calls Payment Changes API. No contract modification in Lease Accounting Manager. |
| Exercising Renewal Option (Fixed Term or Month-to-Month) | Calls Renewal Event. No contract modification in Lease Accounting Manager. |
| Adding Renewal Term (Not Reasonably Certain) | No data send to the Lease Accounting Manager. |
| Updating the term of the Contract | Results in contract modification. |
| Adding Renewal Term is Reasonably Certain AND OR with Payment Change | Results in contract modification. |
| Changing Option Status (Reasonably Certain ↔ Not Certain) | Results in contract modification. |
| Changing End Date of Fixed Term Contract | Results in contract modification. |
Best Practices
Always enter accurate dates as they drive accounting treatments.
Use the correct review type for cost changes to ensure the contract synchronization generates the correct output from the Lease Accounting Manager platform.
Document the reason for changes or updates for audit purposes.
When in doubt, consult the accounting team.
To check the history of all accounting changes, review the audit log or check the lease accounting history.
Refer to Lease Variation Actions and Statuses topic for better understanding of the actions and statuses in Real Estate Manager.