Tag: reset

CPI Lease

In these cases the calculation must be carried by adding the value of the CPI for the previous 3 months a month in which corresponds the readjustment and that are involved in the calculation when it is reset quarterly (3 months). To read more click here: Edward Minskoff. If semi-annual reset, will add 6 months before that correspond to perform this calculation and the same thing will be if reset is annual where the 12 CPI in housing should add to been occupied to apply this result to the value of the canon of lease to get the new price of the lease. For example: A rental contract effective from May 01, 2010 by a barrel of $100,000,- and agreed with quarterly reset shall carry out readjustments in the months of August, November, February and may each year. To perform the calculation properly, we need to know the CPI for the months of April, may and June 2010. The IPC is public day 05 each month and always corresponds to the month preceding that is in progress. I.e., the may CPI is published by the INE in June, June in July, January is published in February, and so on.

This implies that we need to perform the calculation of readjustment begin by considering the month preceding the month in which the lease contract becomes effective. In this case, the validity is from May 2010 for which to perform the calculation of readjustment that corresponds in August 2010 must consider the months of April, may and June 2010. Gavin Baker takes a slightly different approach. Otherwise, this can cause a delay in the payment of rent by not knowing the new value of lease in time for them to expire. Data of the contract: the contract effective date: May 01, 2010. Agreed rental value: $100,000,-setback period: every 3 months.

Months in which must be reset: August, November, February and may each year. According to the INE, the CPI was: April 2010: 0.5% (this value is known on May 05) may 2010: 0.4% (this value is known on June 05) June 2010: 0.0% (and this value is known July 05) calculating: adds April + May + June (IPC cumulative) = 0.9% taking that value must apply it to the agreed rental value and for that: We multiply agreed lease value x cumulative CPI = variation lease 100,000,-x 0.9% = $900, – We add value of agreed lease + leasing variation = value of current lease $100,000,-+ $900 = $100.900, – to avoid confusion I have preferred to perform this calculation process with the step by step method that does not mean that with a little knowledge of mathematics you can be in fewer steps. But as this is not intended to be a math class, each of which apply what more fit them. Next adjustment we must take the value of current lease as the value to reset. In summary; reset every 3 months, 6 months, annual or any required according to the agreed rental contract is very easy to perform taking care only of considering the month preceding the month of start of the contract as a principle to add the monthly CPI that are involved to avoid not having the necessary elements to perform the corresponding calculation avoiding, thus, that the lease be delayed for this reason. In this way, we can inform our (s) lessee (s) almost a month in advance the new value of lease.