As a property manager for many years, I found that one of the essential things to have was an automatic reminder in my bookkeeping system for CPI and other increases in leases. One of the sins of property management, (whether self-managed or professionally managed) is failing to apply CPI increases when due. It is very difficult to go back and expect a tenant to be penalized. Particularly if you are going back many months.
However, if it were me and I caught this mistake, I would now write a letter to the tenant, informing him or her of your mistake and beginning with the following month's rental amount to collect the correct amount. Determination of the correct amount will be based precisely on how the COL clause is written in your lease. A comparison of the base year and the COL year is the key to it. For example do you have the right to compare the beginning of the lease in 2005 to May of 2010 and collect the difference? Or, can you only collect on a twelve month basis, from May 2009 to May 2010. What then happens after May 2010.
As mentioned you may not either legally or practically want to pursue collecting past payments, as this was your oversight. However, you should be able to begin to collect with a 30 day notice to the tenant all future increases due on the lease according to the indicated terms of your COL clause.
Please do not accept this as legal advice. All legal matters should be addressed by an attorney in your jurisdiction.
Onward and Upward!
Oct 1, 2012