It is true that commercial lease agreements might be lengthy. Extracting the main points of a lease or worse, comparing the specifications of a large number of leases — is time-intensive. Lease abstraction is the procedure of purifying the most pertinent and frequently used information inside a commercial lease agreement.
Certainly, you can use Lease abstraction service and ensure that you have the best ways in hand to tackle everything. Anyhow, the end product i.e. A lease abstract is an easy-to-read and concise, summary of a lengthy lease agreement. The abstract is characteristically easy to evaluate and update and includes the most crucial legal, financial, and even business specifications of a lease. It even directs users to where they can get greater context on specific provisions. The lease abstract is a meaningfully shortened version of the lease in the absence of complex jargon.
What is Included in a Lease Abstract?
The complexity of detail in an abstract relies on how you plan to use the abstract, whether for acquisition, underwriting, management, or a merger. At a minimum, the abstract generally contains the following general information:
- Names of the tenant(s) and landlord
- Term of the lease
- Address and square footage of the space
- Expiration date
- Renewal options
- If the tenant previously exercised a renewal right
- Sublet options
- Planned future rent escalations
- Tenant’s base rent amount
- Real estate taxes
- If the tenant possesses a correct of first refusal in case the property is the owner sells the property or leases another space in the building
- Presence of any exclusive use clauses
- Close clauses
- Extra sources of revenue connected to the lease, like parking spaces
Retail space leases could include additional details in the abstract like:
- Geographical restrictions on where tenants could open additional stores that might compete with existing stores on the property, or on where landlords could rent space for use of the same purpose as renter.
- Exclusivity agreements
- Needed hours of operations
- The proportion of sales, in case any, that the landlord gets as part of the rent
How to Make things Easy for You?
You can hire a law company to review each lease manually, but picking software for lease abstraction caters additional benefits. First, software permits you to tailor a distinct solution for your needs. No matter you are an investor, an attorney, an analyst, or a property manager, you can easily pick the portions of the lease most crucial to your role. And in case you choose the right abstraction software, you might mix it with your company’s current systems, enabling for seamless transfers of information.
Moreover, lease abstraction software permits you to track crucial dates in leases and set reminders for dates like expirations and renewal periods. Such a function helps ensure you don’t skip any important deadlines, such as opportunities for rent increases.
So, you can use a good lease abstraction software and ensure that you have the best working for your organization or business.