NetLease - Updating Lease Classification After Lease Commencement
Overview
If you need to change the lease classification, but have already commenced the lease and journal entries have been run, you can use a True-Up Modification.
Step-By-Step
Step 1: Navigate to the desired lease record
Step 2: Start a True Up Modification
- From the lease, click "Modify"
- Select "True-Up Modification" from the list of available modification types
- Scroll to the bottom of the modification screen and select the Reclassification tab.
- Update the lease classification to the desired one
Step 3: (Optional) If you want the change to apply prospectively
- Click Add Version at the top of the modification screen
- Enter today's date as the Version Date
- This ensures the classification only changes going forward and doesn't retroactively adjust the full lease history
Step 5: Complete and Review the Modification
- Select "Modify Lease" and ensure the modification is reflected as you intended on the lease record
Step 6: Test in Sandbox First (Optional - but strongly recommended)
- Before applying to production, replicate the change in your sandbox environment to verify journal and reporting behavior
Alternative Option: End and Restart the Lease
If a true-up modification doesn't fit your needs (e.g., for short-term or low-value leases), then you can terminate the existing lease early and create a new lease for the remaining term.
Step 1: Terminate the existing lease
Step 2: Create the new lease record for the remaining portion and assign the new classification
Step 3: Link the new lease to the original by setting the new lease as a child of the original lease.
You can do this by entering in the "old" lease as the Parent on the child lease's record under Related Records