This section describes the implications of using the amend function to change the status of a lease.
Changing Lease Status from Active to Month-to-Month
When you change the lease status from Active to Month-to-Month, the Extension End Date field becomes required and the Termination Date field is disabled. The extension end date cannot be earlier than the lease termination date. When you save the changes, payment schedules and billing items are created for the new period that has been added.
When the lease status changes from Active to Month-to-Month, not-normalized payment or billing terms are extended only if the extension does not overlap with an approved schedule. Otherwise, a new not-normalized item is created. The schedule day for the new term would be the same as the original term.
For existing normalized terms with an end date that is the same as the lease termination date, Property Manager creates a new term with the Normalized check box unchecked.
Note: Property Manager does not allow normalized terms to be created when the lease status is changed to Month-to-Month or Holdover, in compliance with FASB 13.
Example of Changing Lease Status from Active to Month-to-Month
Scenario 1
You have an active, finalized, expense lease with commencement and termination dates of 01-JAN-02 and 31-DEC-02. This lease has three payment terms, as shown in the following table:
Term Start
Date End Date Normalized Amount Frequency Term Type
1 01-JAN-0
2
31-DEC-02 Yes $1000 Monthly Base Rent
2 01-JAN-0
2
31-DEC-02 No $3000 Quarterly Operating
Expenses
3 01-JAN-0
2
31-OCT-02 No $500 Monthly Maintenan
ce Charge
Using the amendment function, you change the lease status from Active to
Month-to-Month, and enter an extension end date of 03-31-03. Assuming all schedules in 2002 have been approved, Property Manager updates the lease status to
Month-to-Month and creates new payment terms and corresponding schedules and items as shown in the following table:
Term Start Date End Date Normalized Amount Frequency Term Type
1 01-JAN-02 31-DEC-02 Yes $1000 Monthly Base Rent
2 01-JAN-02 31-MAR-03 No $3000 Quarterly Operating
Expenses
3 01-JAN-02 31-OCT-02 No $500 Monthly Maintenan
ce Charge
4 01-JAN-03 31-MAR-03 No $1000 Monthly Base Rent
The above table shows the changes in the payment terms of the lease. Term 4, not normalized, was created as a result of the lease status change. This term is the same as term 1, except that this new term is not normalized. The end date of term 2 changed from 31-DEC-02 to 31-MAR-03. Term 3 was not selected because the end date of this term did not coincide with the original lease termination date.
If the lease is amended and the extension end date changed from 31-MAR-03 to 15-APR-03, and none of the schedules have been approved, the changes shown in the following table occur:
Term Start Date End Date Normalized Amount Frequency Term Type
1 01-JAN-02 31-DEC-02 Yes $1000 Monthly Base Rent
2 01-JAN-02 15-APR-03 No $3000 Quarterly Operating
Expenses
3 01-JAN-02 31-OCT-02 No $500 Monthly Maintena
nce Charge
4 01-JAN-03 15-APR-03 No $1000 Monthly Base Rent
In the above table, Property Manager did not pick up terms 1 and 3, since their end dates did not coincide with the old extension end date of 31-MAR-03.
Changing Lease Status from Month-to-Month to Active
When changing from Month-to-Month status to Active status, the billing terms, rent index, and variable rent, as well as any tenancies must be set up or extended. You are
required to change the lease termination date. The Extension End Date field is disabled.
Changing the Lease Status from Lease Ordered or Signed
You can change the lease status from LOF or SGN to another status freely in either of the following cases:
• You change lease status from LOF to SGN and vice versa
• You have not created payment or billing terms
If terms exist, the implications depend on the new lease status. If you are terminating the lease, the following rules apply:
• If you contract the lease, Oracle Property Manager deletes draft schedules.
• If you have approved schedules, you must finalize the lease before terminating it.
Oracle Property Manager then creates schedules and items for recurring terms.
When moving the lease to any other lease status, you must finalize the lease first. Oracle Property Manager then creates schedules and items for existing lease terms.
Changing the Lease Status to Month-to-Month or Holdover
When changing the lease status of a finalized lease to MTM or HLD, you must provide an extension end date. This date must be later than the previous end date of the lease.
Thus, you extend a lease when you change the lease status from Active or Terminated to MTM or HLD. See also, Extending or Expanding Leases, page 4-110.
Extending Leases in Month-to-Month or Holdover Lease Status
After a finalized lease is in MTM or HLD status, you can either manually extend the lease every month or run the concurrent program PN - Month to Month Rollforward Process. This concurrent program acts as follows:
• Extends leases to the specified date. The concurrent program catches up with extensions that you skipped in previous extensions by extending all selected leases to the same date.
• Extends rent increase and variable rent agreements, if required
• Prorates term amounts and creates appropriate items for non-monthly terms
• Records amendments so that you can track lease history
For more information, see Month to Month Rollforward, page B-22.
Changing the Lease Status from Month-to-Month or Holdover to Active
When you change the lease status to Active from MTM or HLD, you must provide a new lease termination date. If the new termination date is the same as the extension end date, Oracle Property Manager takes no further action. Else, Oracle Property Manager
behaves as follows:
• If the new termination date is earlier than the extension end date, Oracle Property Manager treats this modification as a lease contraction. See Contracting Leases, page 4-111.
• If the new termination date is later than the extension end date, Oracle Property Manager treats this modification as a lease expansion. See Extending or Expanding Leases, page 4-110.
Note: If you create a new normalized term or normalized terms existed before you originally changed the lease status to MTM or HLD, Oracle Property Manager normalizes the new terms or the child terms of the old normalized terms. It does not renormalize existing terms. See Normalizing Terms During Lease Expansion, page 4-111.