A lease abstract is a concise summary and analysis of a lease agreement, providing the key provisions from lease documents in an easy-to-understand format. Lease documents tend to be extremely long, complex, and difficult to parse, particularly for those who aren’t used to navigating them. Lease abstracts empower employees to review the most pertinent information without needing to hunt through those documents.
Additionally, lease abstracts act as a framework and reference point for navigating the original documents, making it easier to locate additional information within the full lease agreement that may not be covered by the abstract itself. They also serve to point out errors, inconsistencies, or missing information from the lease agreement.
Lease abstracts help to mitigate risk by ensuring that all involved parties are on the same page about the lease agreement. They increase the visibility of key information so that everyone can quickly get up to speed and have a full and correct understanding of their roles and responsibilities. They also highlight important dates and payments related to lease administration, making sure that all obligations are fulfilled by the appropriate parties in a timely manner.
In this article, we’ll look at how lease abstraction works, what you can do to take this responsibility off your plate, and how Tango helps.
Preparing lease abstracts is tedious
Most large organizations simply don’t have the bandwidth to prepare their own lease abstracts.
Lease abstract creation is a time-consuming process, requiring careful and thorough attention to detail. Your lease department needs to gather all documents related to the lease agreement, including any amendments, addenda, or updates, and ensure you have access to everything that could affect the terms of the lease.
From there, you have to determine which provisions to include in the abstract. The specifics a lease administrator chooses to cover may vary based on your particular purposes, but these elements are generally considered essentials:
- Name of the lessee
- Lessee’s past, present, and future leases
- Address of the property
- Square footage
- Base rent
- Security deposit information
- Additional rent provisions, such as common area maintenance, taxes, caps, recoveries, and insurance
- Pro rata share
- Lease term, including start and expiration dates
- Any other critical dates
- Lease options, such as expansion, relocation, renewal, and right of refusal
- Permitted uses, including restrictions or exclusives
- Co-tenancy and/or subleasing if applicable
- Parking requirements
- Repair requirements
- Lessee improvements or allocations
- Hidden-termination clauses
- Outstanding fees or fines
Beyond these basic elements, lease administrators should consider who they’re preparing the lease abstract for and why. What pieces of information do they need to know? For example, if the lessee is a franchisee, then the lease agreement should include the franchisor’s requirements upon a default on the lease, and the abstract needs to include it as well.
Having determined what to include, administrators then need to go through every document of the lease agreement to pull out all of the pertinent information and summarize it in the abstract. The goal is to make it concise and easily readable, while remaining precise and detailed.
Every piece of information they include needs to account for changes made by amendments or updates and cite where each provision was pulled from so that the abstract can serve as a reference guide to the original lease documents.
Lease abstractions take quite a bit of time, and if lease administrators aren’t careful, their abstraction may inadvertently change how someone understands the lease’s provisions. Discrepancies between the lease agreement and the abstract can lead to huge headaches down the road.
That’s why most organizations leave lease abstraction to trusted real estate service firms.
Leave lease abstraction to the pros
If processing stacks of legal documents sounds a bit overwhelming, you’re not alone. At Tango, we partner with reputable firms who provide lease abstraction services for our customers. We give these partners a template to ensure their abstractions work as smoothly as possible in Tango Lease.
We’ve worked with numerous real estate service companies in the past, and we’re always willing to work with you to train your favorite firm in our system. Don’t already have one in mind? We’d be happy to recommend one of the premier firms we work with all the time.
Whichever firm you choose, we’ll ensure your lease abstractions are processed by hands you can trust. And if you’re among the rare breed of businesses with the bandwidth and expertise to handle lease abstraction in-house, we can train your team to use the Tango Lease template as well.
Take charge of your lease management
Tango Lease enables you to easily manage all aspects of lease administration and accounting. Keep track of important dates, manage renewals, review clauses, and streamline your processes to save valuable time. Use our lease abstraction templates with a firm of your choice to maximize the benefits of our time-saving tools.
With Tango Lease, all of your lease-related information gets organized into intuitive dashboards, equipping you to manage lease accounting schedules, avoid overcharges, maintain compliance with the latest lease accounting standards, and perform lease activities. Your team can analyze and explore your entire lease portfolio from the same place.
See what our lease administration and accounting software can do for your organization.
