What is a lease abstract?
A lease abstract is the output of lease abstraction. It is a document that summarizes the crucial information contained within a lease.
Who prepares a lease abstract?
Lease abstraction could be performed manually in-house, but is usually carried out by a third-party lease abstraction service.
How much does a lease abstract cost?
Lease abstraction service providers can cost anything from $100, for an independent abstractor, to $4,000, for an international consultancy. Here are some options and their price:
LeaseLens: Free to use. If you’d like to export your results, it is $25 per export.
Other AI companies: $100 per lease for an AI-supplemented lease review.
Lease abstraction outsourcer: $125-140 per lease
Premium lease abstraction outsourcer (Big 4): $140-150/lease
Biglaw firm: $1,000-$4,000/lease
Internal lease abstraction: this is hard to estimate. It depends on the compensation of the person abstracting leases and how much time they spend on each lease (this can range from hours to days).
How long does lease abstraction take?
Lease abstractions can take anywhere from two to eight hours per lease. The time taken to abstract a lease depends on:
Lease complexity: some can be simple two page leases, others can be hundreds of pages with multiple amendments.
Reviewer speed: experienced reviewers can abstract leases more efficiently.
Using AI: quality lease review AI can speed up the process. For many lease reviews (without complex amendments), an AI-only lease review may be sufficient.
An AI-only lease abstract can be completed in minutes. To try it for yourself, go to LeaseLens.ai. You don’t even need to create an account to review a lease.
How long does a human-only lease abstraction take?
A human-only lease abstract can take from one hour per lease (for an experienced review abstracting a short lease), up to two days per lease for an experienced reviewer abstracting a complex lease with multiple amendments.
How long does a third-party lease abstraction service take?
If you decide to use a third party lease abstraction service, you should consider:
How long it takes to find and choose the lease abstraction service.
The time it takes to send your leases to the third party (this should be pretty quick).
Whether the lease abstracting service has immediate availability, or if you have to wait.
How long it takes the lease abstracting service to review your leases.
How long it takes you to review the abstracts prepared by the lease abstracting outsourcer.
- Note that this is not necessarily easy or quick. One lease administrator we spoke with said: “At my previous job, we outsourced lease abstraction. It didn’t work. The lease abstractor was not very focused on what [real estate company] needed - quality was poor. And took a long time. It took us longer to review the abstracts than just doing it ourselves.”
What is included in a lease abstract?
The contents of a lease abstract depend on the type of lease. For example, a commercial real estate lease abstract for retail properties will contain different data points than an equipment lease abstract. The provisions contained within an abstract can also be customized to the lessor’s preference.
However, most lease abstracts for residential and commercial real estate (CRE) leases contain certain data points. These may include:
- Basic information - Lessor and Lessee’s names / address of premises / square footage
- Deposit information - Did the lessee place a security deposit?
- Rent information - base rent / additional rent amount / rent increases / percentage rent
- Termination - What are the termination clauses? Are there renewal option?
- Critical dates - What is the term of the lease? Where is the commencement date and expiration date?
- Responsibilities - Who is responsible for operating expenses and/or common area maintenance?
- Escalation processes - What course of action should be taken to escalate certain issues?
- Exclusivity - Are there any exclusive use provisions?
What are the two types of lease abstracts?
Lease abstracts can be broken down into two types; short form and long form. As the names suggest, the long form abstract contains more information.
Short form lease abstracts
Cover the basic information that is most commonly accessed within in a lease document.
Long form lease abstracts
Contain everything within the short form abstract plus more detailed information.
What is the purpose of a lease abstract?
Most of the language within a lease agreement is unnecessary for day-to-day lease administration required for lessors, property managers, or lenders etc.. Lease abstracts allow lease managers to quickly and easily locate the crucial information they need to carry out their job.
Who needs lease abstraction?
Lease abstraction is useful to any individual or company than manages multiple leases. Some common use cases are:
- Property management
- Due diligence
- Lease administration
What is the lease abstraction process?
At the highest level, the lease abstraction process is the extraction of key provisions from relevant leases that are then presented in a summary template. The lease abstraction process usually involves the following steps:
- Collect relevant lease documents to be abstracted.
- Determine which lease data points should be included in the summary.
- Manually review each lease to locate the relevant provisions.
- Copy and paste relevant provisions into a lease abstract template.
- Distribute lease abstracts to relevant stakeholders for review.
- Store completed lease abstracts for when they are needed.
- Repeat when new lease agreements are created.
What are the benefits of lease abstraction?
At its simplest, lease abstraction helps lessors, property managers, lease administrators etc. protect themselves and help tenants. By summarizing the crucial information contained within lease documents, property owners can easily access relevant information when necessary.
Lease abstraction is also helpful in the underwriting process. Lenders and asset managers consider lease provisions when determining the value of an asset.
Lastly, lease abstracts also make financial information easily accessible to accountants to manage billing, cash flow and determine who is responsible for expenses.
What are the benefits of lease abstraction software?
Lease abstraction can take four to eight hours per lease. With lease abstraction software, you can abstract your entire lease portfolio in minutes.
Manual lease abstraction costs at least $120 and can reach up to $500 per lease. The time savings afforded by automated lease abstraction tools like LeaseLens also lead to cost savings. You can view your LeaseLens abstract for free, or choose to export it for $25 per lease.
Improve workflow efficiency
With faster and cheaper lease abstraction, your lease administration workflows become instantly more efficient. Rather than having to wait for an individual or third party to abstract new leases, they can be instantly abstracted and processed.
Speed up automation
Now that you can instantly access and store all of your lease abstracts in a uniform manner, it becomes easier to create repeatable automation to process leases, contact lessees or set reminders for upcoming critical dates in your leases.
Table of Contents
- What is a lease abstract?
- Who prepares a lease abstract?
- How much does a lease abstract cost?
- How long does lease abstraction take?
- How long does a human-only lease abstraction take?
- How long does a third-party lease abstraction service take?
- What is included in a lease abstract?
- What are the two types of lease abstracts?
- Short form lease abstracts
- Long form lease abstracts
- What is the purpose of a lease abstract?
- Who needs lease abstraction?
- What is the lease abstraction process?
- What are the benefits of lease abstraction?
- What are the benefits of lease abstraction software?
- Save time
- Save money
- Improve workflow efficiency
- Speed up automation