Blog for Ty Bakti, President NETTEC Associates Ltd.
I have been leasing for years and although I have heard the term "Overhold", I have never really considered my company to have been affected by the circumstance.
As it turns out, after a careful review and audit, we have indeed discovered that we have paid more than we had to on a few leases. This mainly was a result of simply not paying attention to our lease portfolio.
Is "Overhold" a common occurrence in this industry and isn't what they do unjust? Further, what can a company do to remedy this problem?
Jerry R. Thorold CFO
Reply:
I have been evaluating leases for organizations for a number of years and have found 'Overhold' to be a recurring oversight. Leasing companies refer to a term that continues a lease with or without your knowledge as an 'EVERGREEN LEASE'. This term refers to a lease that self-renews each year or from month to month until the lessee gives formal notice of its termination, within a specified period of time. How do you know when to give the option date notification to the lessor if you don't have a good handle on when your lease is coming due?
'Option dates' are the dates by which the lessee must inform the leasing company of their end-of-lease intentions. The lease agreement you negotiated three or four years ago may not look so good if you miss your option date.
In a situation where an 'Overhold' exists, and you are paying additional payments, it is not unlawful for the leasing company to debit your account for as long as you have use of the asset or until you have given proper and formal notification.
TrackMyLeaseTM is inexpensive, and is really a "set and forget" sort of application. All you do is fill in a few fields and the software does the rest, giving you plenty of notice, well in advance of your IT and equipment lease option dates. Now you can decide what you want to do with the equipment, and not go into costly "Overhold".
If you have any questions, require advice on your lease or would like to share an experience on our blog, please contact me at ty@nettecassociates.net
Thank you.
Ty Bakti, President
