For accounting purposes, Stanford defines a real estate lease as an agreement, in which Stanford funds are used, to rent or control specifically identified property outside of the historic and Stanford Redwood City campuses, for a specific period of time greater than 1 month. The Lease agreement provides Stanford rights to control use of the identified asset, such as land, a building or a portion of a building, in exchange for a payment or consideration because the property is owned or controlled by another party. The process to enter a lease agreement for Stanford starts with the department determining the type of lease being entered, identification of funding source and completing the preapproval process before submitting a requisition in iProcurement. For university policy on Real Estate Leases, refer to Administrative Guide Policy 5.2.5: Real Estate Leases.
Before submitting a requisition, complete the following requirements:
All real estate leases must be included as a capital request. Approval for lease can be requested as part of the Capital Planning Process, which is managed by the Vice President for Land, Buildings & Real Estate (LBRE) and occurs in conjunction with the university’s annual budgeting process.
Identify the funding source(s) for the contracted term of the lease prior to submitting a requisition to Procurement Services.
Clearly define the intention of the lease and determine renewal options that are reasonably certain to be exercised, including:
- What is the lease term?
- Does the lease include the option to extend or renew?
- If yes, is the intention to extend or renew?
- If yes, how many months to be extended?
- Who is the department contact for questions regarding this lease?
All real estate leases require a requisition to Procurement Services with the correct expenditure type(s) for the base rent for the total contracted cash payments over the term of the lease.
Departments must select and approve the correct PTA and expenditure types for Real Estate Leases when submitting a lease requisition:
- Expenditures: choose from the expenditure types listed in the table below.
- Base Rent: add only the base rent for the term of the lease; do not include non-lease components (examples include repair and maintenance costs, variable charges such as per-click or per-use charges, consumables and other supplies). Instead, use the separate “RENT OTHER” lease template to enter components not directly related to the base rent. To enter non-lease components, a separate requisition should be created under the same purchase order with the appropriate expenditure type.
- Excluded Items: these items are excluded and not classified as leases: linen services, water/coffee services and indoor plant services.
|52810||RE LEASED SPACE > 1 YEAR||Lease of building or office space with signed agreement greater than 1 year (or less than 1 year with an option and intent to renew beyond 1 year)*|
|52830||RE LEASED SPACE 1 MO TO 1 YEAR||Lease of space with a term greater than 1 month but less than 1 year with no intent to renew*|
|52992||RENT OTHER||Off-campus document storage, miscellaneous materials (tables, chairs, etc.)|
* Charge service and facility fees, and miscellaneous rentals to 52992.
When there are changes to the terms of a lease (i.e., additional equipment, duration of the lease, total cost of lease, other changes), submit a request to Amend / Change a contract for the lease agreement using the SmartMart Contracts system in Procurement.
The oversight of Stanford’s leases is a shared responsibility among a number of different units including:
Schools, Units and Departments should be familiar with the Administrative Guide Policy 5.2.5: Real Estate Leases and have a general understanding of what a lease is and the basic types of leases. Departments are responsible for negotiating the business terms for their own leases.
- Land, Building & Real Estate (LBRE)
Off Campus Lease Requisition and Off Campus Lease Approval forms are submitted to LBRE for review and processing of approval signatures. LBRE can source the leasing agent and provide referrals to third-party attorneys to assist in negotiating the lease. LBRE can also review lease terms and offer comments for consideration.
- Financial Management Services (FMS)
FMS comprises a number of units, including Financial Reporting (FAIR or FR), Real Estate Accounting, Capital Accounting, Procurement Services (Procurement) and the Office of the Treasurer (OOT). These units collaborate to review and approve lease transactions submitted in the university’s financial system, compile financial statement disclosures, ensure compliance with university policies and assess the impact of finance leases on the university’s debt capacity.