NetLease - Renewal Setup
Overview
Lease agreements often include optional renewal clauses. NetLease enables users to track these provisions and process renewals either manually or automatically.
Prerequisites
- Navigate to NetLease > NetLease Setup > System Setup > General, and under the Renewal Settings section, ensure the Automated Renewal field is set to the desired option:
- Not Enabled: Disables the Automated Renewal functionality.
- Pending Review: Renewal options are automatically created but remain unprocessed, allowing for review before manual processing. This is typically best practice.
- Automatically Processed: The system automatically processes renewal records after the final period’s amortization has run.
Note: While New is an option in the drop down, the functionality of creating your own renewal option is not currently supported. Adding an option here will not work how you intend. Additionally, leaving the field blank is the same as selecting "Not Enabled" and is typically why you don't see the field on your lease record.
Renewal record creation
- On the relevant NetLease Lease record, go to the Renewals subtab.
- Select a Default Renewal Type from the dropdown menu. There are three renewal options:
- Auto-Renewal: Creates renewal options with a Scheduled status and checks the Auto Renewal checkbox. The system automatically renews the lease when journal entries are processed in the expiration month.
- Month to Month: Functions similarly to Auto-Renewal, setting the renewal status to Scheduled and checking the Auto Renewal checkbox. However, it also sets the Auto Renewal Term field to 1. The renewal is automatically processed when journal entries run in the expiration month.
- Right to Renew: Creates renewal options with an Available status but does not process them automatically. The renewal must be manually executed.
Note that if the Automated Renewal setting in the System Setup is set to Pending Review instead of Automatically Processed, even Auto-Renewal and Month-to-Month renewal types will not process automatically.
Additionally, although "-New-" is an option in the drop down, you cannot currently create your own renewal types and have them work correctly.
- Next, specify the Default Renewal Term and Total Renewals fields:
- Default Renewal Term: Defines the expected length of individual lease extensions in whole months.
- Total Renewals: Indicates the number of times the lease can be renewed, determining the total number of renewal options available.
- Populating the Auto Renewal Term and Total Renewals will automatically populate the Final Renewal End Date field and create the renewal option records in the sublist:
Additional Notes
- The system assumes the first renewal’s start date will be the month following the lease record’s end date. If a different start date is needed, it can be adjusted using the Renewal Start Date field.
- Renewal options can be manually added by entering details in the sublist columns and clicking Add. Similarly, existing renewals can be edited by selecting a row, making changes, and clicking Ok.
- To clear all populated data in the sublist, use the Reset button in the top-left corner.
- After entering all required information, click Save on the lease record.
Renewal payment changes
Option 1: Add to contract provision
Cleanest way to add payments and you won't see them until they become "active" with the renewal processing.
- If payment amounts need to be adjusted as part of a renewal, they can be managed by updating the system-generated Contract Provision records in the following way:
- Navigate to the Renewals tab on the lease record and click View on the relevant Contract Provision:
On the next screen, click Edit.
- Update the payment details as needed:
- For a single update effective at the start of the renewal period, use the New Payment Amount and Payment Frequency fields.
- For multiple payment uplifts within the renewal period, add them under the Payments subtab.
- Once all updates have been entered, click Save. The new payment details will be reflected in the schedule automatically when the renewal is processed.
Option 2: Add to lease record directly
Lets you see the payment changes before they happen and easily CSV import payment changes, but be careful not to include the payment records within the existing lease term.
- Click Edit on the NetLease Lease Record with renewal options.
- Go to the payment sublist via Amortization Schedules > Lease Payments. Add the payment record associated to the renewal term. Again make sure this payment does not overlap with the existing lease term. If it is within the current lease term it will get included with the amortization schedule and you do not want it to factor into the schedule until after the renewal has processed.
- Click Save. You will be prompted to regenerate the amortization schedule. Regenerate and verify the schedule has not changed.
Next Steps
- Learn more about how renewals are processed in the Renewal Processing article.
