A lease audit is how a buyer finds out whether an apartment building's income is real. You read every lease and check it against the rent roll and the resident ledger: the rent, the term, the concessions, the deposit and the charges. When the three documents agree, you can trust the income in the offering. When they do not, you have found something that changes the price, and you found it while you can still act on it.
This guide covers what a multifamily lease audit checks, how to run one, the findings that come up most and what to do with them.
What Is a Lease Audit in a Multifamily Deal?
A lease audit verifies that the income a seller reports is supported by signed leases and by what residents actually pay. The rent roll is a summary the seller or their manager prepared. The leases are the contracts. The ledger is what happened. A lease audit puts all three side by side, unit by unit.
It is part of due diligence, alongside the physical inspection, the T12 review and the title work. Most real estate due diligence companies focus on the building itself. The lease audit is the income side, and it needs someone who reads leases and rent rolls for a living. Our multifamily due diligence checklist shows where it fits in the full list.
Do not confuse it with a commercial lease audit, which usually means checking operating expense and common area charges billed to a business. Apartment leases rarely carry those charges.
What to Gather Before You Start
Ask the seller for these early, in writing, with a date:
- The current rent roll, as of a recent date, from the property's management software.
- Every lease and renewal, with all addenda (pets, parking, utilities, concessions).
- The resident ledger for each unit, ideally for the last twelve months.
- Deposit records, showing what is held for each resident.
- Any side agreements: payment plans, rent reductions, promised repairs.
- Estoppel certificates, if your purchase agreement requires them, in which residents confirm their rent, deposit and term.
If the seller cannot produce a lease for an occupied unit, write that down. It is a finding in itself.
The Fields to Compare, Unit by Unit
A good lease audit compares the same fields across the rent roll, the lease and the ledger for every unit. Build a simple grid with one row per unit and these columns:
| Field | Rent roll | Lease | Ledger |
|---|---|---|---|
| Resident name | Listed | Signed | Charged |
| Monthly rent | Stated | Contract amount | Amount billed and paid |
| Lease start and end | Stated | Signed dates | First and last charges |
| Concessions | Often missing | Addendum or rider | Credits applied |
| Other charges (pet, parking, utilities) | Sometimes listed | Addenda | Recurring charges |
| Security deposit | Stated | Amount required | Deposit received |
| Balance owed | Sometimes listed | Not applicable | Current balance |
Every mismatch gets a note and a source. "Unit 12: rent roll $1,450, lease $1,375, ledger billing $1,375" (illustrative numbers) is a finding you can take to the seller. "Rents look off" is not.
This is the same work as a rent roll analysis, carried down to the individual lease. Our free due diligence checklist in Excel has a tab for it.
Lease File Audit: Beyond the Rent
A lease file audit checks that the paperwork a new owner inherits is complete and enforceable. Rent can match perfectly while the file behind it has gaps. Look for:
- Signatures and dates on the lease and every addendum.
- Expired leases shown as current, and month-to-month residents shown on fixed terms.
- Addenda that change the deal: a reduced rent, a free month at renewal, a parking space included at no charge.
- Required disclosures and state-specific terms. In Nevada, for example, the rental agreement must show a single maximum rent that includes mandatory fees. A lease form from another state may not.
- Deposit limits. State law may cap what can be held. In Nevada, the deposit plus any surety bond cannot exceed three months' rent (NRS 118A.242).
The Red Flags That Change a Price
Most findings are small. A few patterns are worth a hard look because they point to income that will not be there after closing:
- Concessions missing from the rent roll. The rent roll shows full rent while leases carry free weeks or months.
- Recent leases at unusually high rents right before the sale, especially with concessions on the side.
- Delinquency hidden in the ledger. Residents carried as current while balances grow.
- Units leased to staff, family or related companies at rents that are not market.
- Missing leases for occupied units, or occupied units missing from the rent roll.
- Deposits listed but not held, which becomes the new owner's liability at move-out.
None of these proves bad intent. Each one changes what the building earns.
Every Lease or a Sample?
Read every lease if the timeline allows. Sampling saves time on a large property, but the units that matter are the ones that do not match, and a sample can miss them. If you must sample, read every lease for rent, term and concessions, and sample only the secondary fields.
Software helps. Our platform, AssetVue, reads rent rolls and leases, audits them field by field and links each figure back to the page it came from, so a full audit fits inside a normal due diligence period.
What to Do With the Findings
A lease audit is only useful if it changes a decision. Take the findings through three steps:
- Re-underwrite. Replace the rent roll's income with the income the leases and ledger support, and see what the deal looks like. Our guide to multifamily underwriting covers the rest of the model.
- Negotiate. Ask for a price reduction, a credit at closing, or for the seller to fix specific files before closing. Findings with a source document carry weight.
- Plan the takeover. Anything you cannot resolve becomes the new manager's first list: missing signatures, deposit corrections, residents to put on current leases.
If you are under contract and want the audit done for you, our operational due diligence works beside the physical inspection that other real estate due diligence companies provide. If you are earlier than that, start with a free multifamily deal review.
