Contract Conclusion before Lock-In Period

[Former Member]

Business case:

Client has rented out apartment for 3 years with 1 year lock in period. Rent for first full year (lock in period) has been collected in advance & billed for full year to client in advance. Client is using Accrual/ deferral function as well.

Tenant intends to vacate the apartment after say 8 months i.e. before lock in period. As per the process, he is allowed to vacate but he will not get the refund for the rent for next 4 months since he is under lock in agreement. Tenant has no issues in that.

Issue:

The issue is the moment we change the contract end date, system reverses the posting for rest 4 months which has already been billed in advance If we do not change the contract end date,

a) we will not be able to lease out this apartment to someone else till the end of 12th month

b) we will not be able to recognize the rest 4 months rental as revenue in 8th month (Deferral)

Expectation from system:

i) System should record the exact vacation date of the tenant

ii) We should be able to lease the space out to someone else from 9th month onward

iii) 4 months unutilized rental that is lying as advance should be posted as Revenue in 8th month end deferral run.

iv) System should not reverse the billing for the contract for unutilized period.

Please advise how can we handle this?

[Former Member]

Hi Rakesh

You can follow one out of the two methods which I l describe :

1. Create a new contract with the same rental object with the new Contract Start date i.e. of the 9th month.In the previous contract mark the rental object as Informational with the specif relationship validity i.e. from the first month to 8th month.

2. In the same contract mark the rental object as Informational with the specific relationship validity i.e. from the first month to 8th month and assign the same rental object with a new relationship validity i.e. from the 9th month onwards.Create a new Postings field in the Posting Parameters with the new tenant in the Partners tab.Assign a new condition with the new validity, and in the Terms tab assign the new Postings field.

Hope it could be some help to you according to your requirements.

Regards,

Siddharth Khandelwal

[andre_nakratzas]

Hi you shouldn't use the contract end date as the exit date. Best to use a different field for that or create you own user specific field (see note 690900). The contract end date is used for financial purposes and explains the behaviour of the reversal posting. Therefor leave the contract end date in place, since that is also the legal end date of the contract and corresponds to the rent that your are charging.

In order to be able to rent out the appartment to someone else you can set the informational indicator in the object assignment of the Object tab.

Regards, Andre