Configuring Covenant and Responsibility Templates for Contracts

If you often use the same lease covenants and responsibilities in your contracts, you can create templates that can be used to automatically apply these covenants and responsibilities to contacts and equipment contracts in the RE Contract and Equipment Contract setup wizards.

Step One: Create a Template Location (RE Contract Only)

If you want to use covenant and responsibility templates for RE Contracts, you must first create a template location. This location will not serve any purpose other than being linked to your RE Contract template.

To create a location:

Do one of the following:
- To create a location from the Tools menu:
  1. Click Tools in the upper-right corner.
  2. Select Setup Wizards from the field.
    
    The Setup Wizard window opens.
  3. Select the Location option.
  4. Select the portfolio you want this location to belong to from the field that appears above the entity options.
  5. Click Next.
    
    The Location Setup Wizard opens.
- To open the Location Setup Wizard from the Location module:
  1. Navigate to Location > Details > Summary .
    
    Use the links in the Navigation Pane on the leftmost side of the page.
  2. Click Add a Location.
    
    This displays in the Actions menu on the right side of the page.
    
    The Location Setup Wizard opens.
Select the program that this location should belong to from the Program field.
Enter Wizard – Location in the Location ID field.
Enter Wizard – Location in the Location Name field.
Click Next button until you reach the final step of the Location Setup Wizard.
Click Finish.

The Location Setup Wizard closes. The location has been created.

Step Two-A: Create a Template RE Contract

Next, you will need to create a template RE Contract. This contract will house your default covenants and responsibilities.

Note:

If necessary, you can create multiple template contracts.

To create a template RE Contract:

Do one of the following:
- To create a RE Contract from the Tools menu:
  1. Click Tools in the upper-right corner.
  2. Select Setup Wizards from the field.
    
    The Setup Wizard window opens.
  3. Select the RE Contract option.
  4. Select the portfolio you want this contract to belong to from the field that appears above the entity options.
  5. Click Next.
    
    The RE Contract Setup Wizard opens.
- To open the RE Contract Setup Wizard from the Contract module:
  1. Navigate to Contract > Details > Summary .
    
    Use the links in the Navigation Pane on the leftmost side of the page.
  2. Click Add a RE Contract.
    
    This displays in the Actions menu on the right side of the page.
    
    The RE Contract Setup Wizard opens.
Enter Wizard – Template in the Contract ID field.
Enter Wizard – Template in the Contract Name field.

Important!
Your Contract ID and Name MUST have Wizard – in it. If you are using multiple templates, you may differentiate between them by giving them unique identifiers after Wizard – .
Select your template location you created in the Step One: Create a Template Location (RE Contract Only) procedures above from the Location field.
Click Next button until you reach Step Three: Contract Covenants.
Expand the section below to learn how to add covenants to your default template.

Add Covenants to your Default Template
Important!
There are some steps related to creating a covenant that pertain to key dates and financials. Do not complete these steps in your template. Complete them at the individual contract-level to ensure this data is entered correctly.

To add a default covenant to your template contract:
1. Click Add Covenant in the Covenants table.
  
  The Add Covenant window opens.
2. Select the covenant group from the Group field.
  
  For example, “Lease”.
3. Select the type of covenant from the Type field.
  
  Types of covenants could include (but are not limited to) cancellation, co-tenancy, and permitted use.
4. Select the status of the covenant from the Status field.
  
  For example, “Active” or “Expired”.
5. Select the category of the covenant from the Category field.
  
  The category is typically used to indicate whether this is part of the original agreement or an amendment.
6. Select the Covenant Exists? check box to indicate whether the covenant currently exists in the existing lease.
  
  A common use case for this check box is for customers who implement standard covenants for their contracts. However, these customers may have existing leases that do not have some of these standard covenants. These standard covenants could be applied to their contracts on a global level at implementation, but the customer could indicate that the covenant does not currently exist on a specific contract by clearing the Covenant Exists? check box. Then, when it is time for the customer to renegotiate the contract, they can quickly and easily see which covenants should be negotiated in the new contract.
7. Enter the section of the lease document that this covenant is from in the Section field.
8. Select the Standard Language check box if the language of the covenant is standard for all of your leases.
9. Enter the language of the covenant in the field below the Covenant Exists?check box.
10. Enter the form or version number in the Form / Version # field.
11. If this covenant is related to an accounting adjustment—such as a purchase option, cancellation, or residual value guarantee—select the appropriate accounting adjustment type from the Accounting Adjustment Type field.
12. If you selected an accounting adjustment type in step k above, select the ASC 842 schedule that adjustment type will be associated with from the ASC 842 Schedule field.
13. If you selected an accounting adjustment type in step k above, select the IFRS 16 schedule that adjustment type will be associated with from the IFRS 16 Schedule field.
14. If you will be allocating a percentage of a covenant expense to a secondary schedule, enter the allocation percentage in the Secondary Schedule Allocation field.
15. To attach a document to a covenant, click Attach Document .
  
  A window opens.
16. Do one of the following:
  - To select the document you want to use from your lease documents:
    1. Click the folder where you uploaded your lease document.
      
      The document appears in the Documents pane.
    2. Select the document.
    3. Click Select Document.
      
      The window closes. The document title appears in the field next to the Attach Document .
  - Upload a Document.
17. Enter the page where the covenant is referenced in the Page field.
18. Enter the paragraph where the covenant is referenced in the Paragraph field.
19. Enter the line where the covenant is referenced in the Line field.
20. Click Add.
  
  The Add Covenant window closes. The covenant is added to your Covenants table.
Repeat Step 6 to add additional covenants to your contract template.
Click Next.

The Step Four: Responsibilities page of the RE Contract Setup Wizard opens.
Expand the section below to learn how to add responsibilities to your contract template.

Add Responsibilities to your Default Template
Important!
There are some steps related to creating a responsibilities that pertain to key dates and financials. Do not complete these steps in your template. Complete them at the individual contract-level to ensure this data is entered correctly.

To add a default responsibility to your contract template:
1. Click Add Responsibility.
  
  The Add Responsibility window opens.
2. Select the responsibility group from the Group field.
  
  Create a new group or category.
  
  Groups are the first level of organization in Lucernex. Groups are the parents of types, and grandparents of categories. Groups, types, and categories are used to simplify reporting.
3. Select the type of responsibility from the Type field.
  
  If you want to create a new type, follow the Add a Type procedures.
  
  Types are the second level of organization in Lucernex. Types are the children of groups, and parents of Categories. Groups, types, and categories are used to simplify reporting.
4. Select the maintenance category from the Maintenance Category field.
  
  If you want to create a new category code, follow the Add an Asset Category Code procedures.
5. Select the party responsible for maintenance from the Maintain field.
  
  The values that you will typically use in this and the next two fields are “landlord” and “tenant”.
6. Select the party responsible for repairs from the Repair field.
7. Select the party responsible for replacement from the Replace field.
  
  To add selectable values for the Maintain, Repair, or Replace fields, follow the Add a Group procedures.
8. Select how the landlord will pass the cost of the responsibility to the tenant from the Pass-Through Type field
9. Select the Included in Rent Flag check box if the cost associated with this responsibility is included in the base rent.
10. Enter the level of service the service person can offer in the Service Level field.
11. Select the individual responsible for performing the service from the Service Person field.
  
  To add a new person, follow the Add a Person in the Add Person window procedures.
12. Select the expected response time from the Response Time field.
13. Enter any comments in the Comments field.
14. Select the covenant this responsibility is associated with from the Covenant field.
15. Enter the section of the covenant this responsibility is associated with in the Section field.
  
  Note:
  The Amendment is not relevant when you initially create your contract. However, if you are adding responsibilities to your contract and you want to associate a responsibility with an amendment, you would select the amendment from this field. To learn how to create an amendment, see the Add an Amendment procedures.
16. Click Add.
  
  The window closes. The responsibility is added to the Responsibilities table.
Repeat Step 9 to add additional responsibilities.
Click Next button until you reach the final step of the RE Contract Setup Wizard.
Click Finish.

The RE Contract Setup Wizard closes. Your contract template has been created.

Step Two-B: Create a Template Equipment Contract

Next, you will need to create a template Equipment Contract. This equipment contract will house your default covenants and responsibilities.

Note:

If necessary, you can create multiple template contracts.

To create a template Equipment Contract:

Do one of the following:
- To create an Equipment Contract from the Tools menu:
  1. Click Tools in the upper-right corner.
  2. Select Setup Wizards from the field.
    
    The Setup Wizard window opens.
  3. Select the Equipment Contract option.
  4. Select the portfolio you want this equipment contract to belong to from the field that appears above the entity options.
  5. Click Next.
    
    The Equipment Contract Setup Wizard opens.
- To open the Equipment Contract Setup Wizard from the Equipment Contract module:
  1. Navigate to Equipment Contract > Details > Summary.
    
    Use the links in the Navigation Pane on the leftmost side of the page.
  2. Click Add Equipment Contract.
    
    This displays in the Actions menu on the right side of the page.
    
    The Equipment Contract Setup Wizard opens.
Enter Wizard – Template in the Contract ID field.
Enter Wizard – Template in the Contract Name field.

Important!
Your Contract ID and Name MUST have Wizard – in it. If you are using multiple templates, you may differentiate between them by giving them unique identifiers after Wizard – .
Click Next button until you reach Step Three: Contract Covenants.
Expand the section below to learn how to add covenants to your default template.

Add Covenants to your Default Template
Important!
There are some steps related to creating a covenant that pertain to key dates and financials. Do not complete these steps in your template. Complete them at the individual contract-level to ensure this data is entered correctly.

To add a default covenant to your template contract:
1. Click Add Covenant in the Covenants table.
  
  The Add Covenant window opens.
2. Select the covenant group from the Group field.
  
  For example, “Lease”.
3. Select the type of covenant from the Type field.
  
  Types of covenants could include (but are not limited to) cancellation, co-tenancy, and permitted use.
4. Select the status of the covenant from the Status field.
  
  For example, “Active” or “Expired”.
5. Select the category of the covenant from the Category field.
  
  The category is typically used to indicate whether this is part of the original agreement or an amendment.
6. Select the Covenant Exists?check box to indicate whether the covenant currently exists in the existing lease.
  
  A common use case for this check box is for customers who implement standard covenants for their contracts. However, these customers may have existing leases that do not have some of these standard covenants. These standard covenants could be applied to their contracts on a global level at implementation, but the customer could indicate that the covenant does not currently exist on a specific contract by clearing the Covenant Exists? check box. Then, when it is time for the customer to renegotiate the contract, they can quickly and easily see which covenants should be negotiated in the new contract.
7. Enter the section of the lease document that this covenant is from in the Section field.
8. Select the Standard Language check box if the language of the covenant is standard for all of your leases.
9. Enter the language of the covenant in the field below the Covenant Exists?check box.
10. Enter the form or version number in the Form / Version # field.
11. If this covenant is related to an accounting adjustment—such as a purchase option, cancellation, or residual value guarantee—select the appropriate accounting adjustment type from the Accounting Adjustment Type field.
12. If you selected an accounting adjustment type in step k above, select the ASC 842 schedule that adjustment type will be associated with from the ASC 842 Schedule field.
13. If you selected an accounting adjustment type in step k above, select the IFRS 16 schedule that adjustment type will be associated with from the IFRS 16 Schedule field.
14. To attach a document to a covenant, click Attach Document .
  
  A window opens.
15. Do one of the following:
  - To select the document you want to use from your lease documents:
    1. Click the folder where you uploaded your lease document.
      
      The document appears in the Documents pane.
    2. Select the document.
    3. Click Select Document.
      
      The window closes. The document title appears in the field next to the Attach Document .
  - Upload a Document.
16. Enter the page where the covenant is referenced in the Page field.
17. Enter the paragraph where the covenant is referenced in the Paragraph field.
18. Enter the line where the covenant is referenced in the Line field.
19. Click Add.
  
  The Add Covenant window closes. The covenant is added to your Covenants table.
Repeat Step 5 to add additional covenants to your equipment contract template.
Click Next.

The Step Four: Responsibilities page of the Equipment Contract Setup Wizard opens.
Expand the section below to learn how to add responsibilities to your equipment contract template.

Add Responsibilities to your Default Template
Important!
There are some steps related to creating a responsibilities that pertain to key dates and financials. Do not complete these steps in your template. Complete them at the individual contract-level to ensure this data is entered correctly.

To add a default responsibility to your template equipment contract:
1. Click Add Responsibility.
  
  The Add Responsibility window opens.
2. Select the responsibility group from the Group field.
  
  Create a new group or category.
  
  Groups are the first level of organization in Lucernex. Groups are the parents of types, and grandparents of categories. Groups, types, and categories are used to simplify reporting.
3. Select the type of responsibility from the Type field.
  
  If you want to create a new type, follow the Add a Type procedures.
  
  Types are the second level of organization in Lucernex. Types are the children of groups, and parents of Categories. Groups, types, and categories are used to simplify reporting.
4. Select the maintenance category from the Maintenance Category field.
  
  If you want to create a new category code, follow the Add an Asset Category Code procedures.
5. Select the party responsible for maintenance from the Maintain field.
  
  The values that you will typically use in this and the next two fields are “landlord” and “tenant”.
6. Select the party responsible for repairs from the Repair field.
7. Select the party responsible for replacement from the Replace field.
  
  To add selectable values for the Maintain, Repair, or Replace fields, follow the Add a Group procedures.
8. Select how the lessor will pass the cost of the responsibility to the lessee from the Pass-Through Type field
9. Select the Included in Rent Flag check box if the cost associated with this responsibility is included in the base rent.
10. Enter the level of service the service person can offer in the Service Level field.
11. Select the individual responsible for performing the service from the Service Person field.
  
  To add a new person, follow the Add a Person in the Add Person window procedures.
12. Select the expected response time from the Response Time field.
13. Enter any comments in the Comments field.
14. Select the covenant this responsibility is associated with from the Covenant field.
  
  You can view information about a covenant by selecting a covenant from the field and then clicking the View .
15. Enter the section of the covenant this responsibility is associated with in the Section field.
  
  Note:
  The Amendment is not relevant when you initially create your equipment contract. However, if you are adding responsibilities to your equipment contract and you want to associate a responsibility with an amendment, you would select the amendment from this field. To learn how to create an amendment, see the Add an Amendment procedures.
16. Click Add.
  
  The window closes. The responsibility is added to the Responsibilities table.
Repeat Step 8 to add additional responsibilities.
Click Next button until you reach the final step of the Equipment Contract Setup Wizard.
Click Finish.

The Equipment Contract Setup Wizard closes. Your equipment contract template has been created.

Configuring Covenant and Responsibility Templates for Contracts

Step One: Create a Template Location (RE Contract Only)

Step Two-A: Create a Template RE Contract

Step Two-B: Create a Template Equipment Contract

Step Three: Create a RE Contract or Equipment Contract

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