How to handle realestate casualties using RE-FX?

[Former Member]

Dear experts

Would you please give me an advice how can I handle some RE casualty using RE-FX?

Here is the scenario:

Lessee perspective

Operating lease

leased are building and rental objects

we have a contract created in RE-FX

casualty happened at the meddle of the contract term (fire) the building is partially destroyed and some of the rental objects are fully destroyed.

The question is how we can handle such scenario from best practices point of view and what we do with already destroyed objects?

Thank you in advance!

[amarendar · Accepted solution]

Hi Ivan,

I never thought of this scenario in REFX, really a tricky situation.

Points to ponder:

1. REFX is integrated to Plant & Maintenance as functional location. You can create a PM order from REFX to take care of breakdown maintenance.

2. You will not get rent during this period from the property - so you have to use the rent free period in the contract, or may be you have to conclude the contract as the property seizes to exist.

3. You may have to use one time postings to take care of any compensation paid to tenant.

4. Insurance part, I am not sure but definitely not in REFX.

5. If the building is completely destroyed and you are using REFX integration with Assets, you may scrap the assets in Asset accounting (retirement of assets without revenue function).

That's all, I can think of this scenario.

Regards,

Amar

[Former Member · Accepted solution]

Hi Amar,

Thank you for the quick replay!

As you said it is a tricky situation because I am looking in this from lessee point of view not as a lessor.

You are completely right we can use PM integration so to create a PM maintenance order for the RE-FX objects involved in the casualties. and yes it's gonna be one time casualty posting so to pay the lessor.

The rent we still need to continue to pay because we rent many objects and if they are not completely destroyed we have to pay for the usage.

I am wondering if we can adjust automatically the future portion of the rent base on the objects we rent.

What I mean is if I rent 1 building with 20 offices for 1000$ and due to some casualty I cannot use one of these offices anymore because it has been completely destroyed how can I do the automatic adjustment of the rent so I will continue paying 950 $ instead of 1000$.

Do I need to create some rule in the contract? Do we have such functionality in the RE-FX?

[amarendar · Accepted solution]

Hi Ivan,

This piece is easy, there is an option in REFX for rent adjustment, where you can increase or decrease the rent.

REAJPR & REAJCH transaction code will do the trick for you.

In case you need more help, i have a related document which i can share.

Regards

Amar

[amarendar · Accepted solution]

Hi Ivan,

Forgot to mention one thing, you need to add an entry (Free -modifiable) in the adjustment tab of the contract before executing t-code REAJPR.

The good news is REFX has a standard solution for it

Regards,

Amar

[narnei · Accepted solution]

Dear Ivan,

As suggested in above reply you can do that also please try to consider below points.Based on the situation your tenancy contract may get closed if renovation period is too long.

Regarding the insurance you can manage the details in Building master data  --> Values TAB ( Standard fields are available for insurance data) --> no separate settlement process, as needed you can deal with Direct FI postins.  or

If you want a entries from RE-FX then can create a new contract with informational Tick( at Objects Tab) only to manage the insurance related transactions by giving a new condition as Insurance claim and Business partner will be your insurence company and post the invoice and payments receipts accordingly, so that your entries will be up to date in RE-FX and FI point of view also.

If you are closing the existing contracts : At Rental object level Occupancy tab manage the period of maintenance by giving the vacancy reason "Renovation due to Fire" (Status for future reporting purpose).

If you are not closing the existing contracts : Then you can adjust the contract conditions for the given period with a required rental values or you can manage this period as a separate condition with condition purpose Statistical, so that rent will not be calculated for this period as well as it will be recorded in your books.

Also Conditions Tab - MEMO (Sub  tab) use for maintain for some description related to this.

If number of contracts are less do this by manual, if its many then try to use the ADJUSTMENTS option to change the conditions values.( Here you can do it for multiple contracts at a time).

Also one more option is if you don't want to disturb the existing conditions in any contract then you can pass a new condition as Discount (to tenants) and give the amount and valid dates & frequency are as required by your business based on the period of renovation so that there will not be any gap in financial books as well.

Regards,

Rao

[Former Member]

Thank you for your suggestions guys it was really helpful!